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

To: Chuzzlewit who wrote (24348)	6/18/1998 2:03:00 PM
From: Lazlo Pierce	Read Replies (1) \| Respond to of 95453

Anyone hear anything else about the CAM/SLB rumor? CAM +5 1/4. Thoughts? Dave

To: Chuzzlewit who wrote (24348)	6/19/1998 9:11:00 AM
From: Sunny	Read Replies (2) \| Respond to of 95453

Thanks for the economics lesson. I believe that at this price level demand is largely inelastic with price in the short run. Are you driving 40% more now than 9 months ago? Are you using more Plastic, fertilizer or chemicals? (I believe most of the feedstock for these products come from Natural Gas.) While I certainly agree with you if price were to triple you would use less of the things you had discretion over. However if the price were to triple then rigs would be drilling manufacturing companies would be raising prices and increasing utilization and the stocks of all of them would have gone through the roof. On the other hand, I think the supply side works very closely with the price. The response to firm and stable oil and gas prices has been an increase in drilling and all that that implies. It worked so well that companies, countries and people did what it took to increase production so that the supply side outstripped demand and when our often mentioned Asians had their problem it reduced the expectation for a growth in demand. Consequently, the price fell. When the price fell the expectation that increased rig demand in a tight rig market fell and the stocks fell before the rigs actually started stacking or reducing price in an effort to hold contracts that were expiring. Cartels, now that is a subject for another day. I enjoyed the opportunity to exchange views. Sunny