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Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: AltLar who wrote (12229)	2/20/1998 1:34:00 AM
From: Czechsinthemail	Read Replies (1) \| Respond to of 95453

I've heard this reference before ... "If prices go high enough to warrant drilling cutbacks". In what way would high prices warrant drilling cutbacks? Larry, the problem with high oil prices is that they work to reduce consumption as people conserve more. They may also have a negative effect in encouraging more rig-building so that supply increases while demand decreases. The great jump in oil prices at the end of the 1970's produced both more rigs and significant cutbacks in oil consumption. The result was disastrous for the drilling and oil services companies. With higher oil revenues on lower consumption, the oil companies have less need to drill to replenish reserves. Reduced consumption extends the life of the reserves they have. That's why the drilling companies say they will do well as long as oil prices don't go too high or too low. Baird