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To: Gameboy who wrote (28032)	8/20/1998 1:19:00 PM
From: Mike from La.	Read Replies (2) \| Respond to of 95453

Gameboy, Thanks for the article on the Chinese shut in of 1000 marginal wells. There is something here I do not understand. I guess everyone knows I've been a advocate of the theory that cuts from marginal wells was going to have a huge impact on oil production, and that no one seems to be paying attention. Your article illustrates my point. According to it, the Chinese have already, before the flooding, cut production by 4.89 million barrels, because production costs were too high. That is an amount that exceeds the entire opec cutback. Estimates in the US is that between 15 and 25% of US production is being permanently lost. This has to be true worldwide. 80% of world's production is from fields that are at, or past their peak production. Yet, futures prices do not seem to reflect any acknowledgement of these huge drops in production. The traders seem to be solely focused on OPEC cuts alone, and the current amounts of crude in storage. They insist that prices will remain low for up to a year, even when the OPEC cuts have not yet fully shown up on the market. I must be under some kind of self delusion, because it seems to me that we are setting up for a very dramatic rise in oil prices, once the effects of these factors take hold. It seems to me to be a no-brainer. What am I missing? Mike from La.