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

To: XPLAY who wrote (32736)	12/10/1998 10:39:00 PM
From: Rob Shilling	Read Replies (1) \| Respond to of 95453

Tom, since you opened up the conspiracy theory door, let me put in my two cents on the oil situation: I think I agree that there is some sort of market share play going on. Since Saudi and the rest of the ME are the low cost producers, they do not like losing market share and making less money at low oil prices too. The events that led to low oil prices may have been just random, but OPEC's reaction recently makes one think they are up to something. Perhaps they are orchestrating a slow response to the situation (witness the disagreements and lack of urgency with OPEC's decisions recently) in order to maximize the "shut-in" time for higher cost oil. With what looks to be a 2-3 mbpd drawdown in world wide supplies currently, I don't see OPEC "flooding the world" with oil. I see OPEC making the necessary adjustments and rather ambivalent if it takes a while to get oil prices up (they win either way, higher prices or less marginal production). I do not think that we are in for multi-year low oil prices, but the perception that we may see that is as good as reality for reduction of marginal production and exploration in the near term. I think both Exxon and Mobil buy oil as well as produce it, so they do not lose as much as one thinks. Plus a low oil price environment will make a merger more anti-trust proof. After the merger, Exxon-Mobil will enjoy reduced costs and more profits from what they are increasingly doing more of, refining and retailing. To me that is the basic goal of the merger. The ME has the low cost reserves, that won't change, and they won't let western oil companies own any of the reserves, but they may let them develop the reserves. I tend to believe Richard Rainwater and think that oil production and demand are getting much tighter. When we reach almost true supply/demand balance, I see the ME making lots of money on $30 oil (with a higher market share) and I see Exxon-Mobil as making most of their money drilling for it, refining it and retailing it. Finally, the return of higher oil prices will probably bring on new higher cost oil production again, but with demand per day getting higher and higher every year, marginal oil producers may not have a significant market share (especially if Big Oil has committed to developing the low cost ME, and not other higher cost places in the world).

To: XPLAY who wrote (32736)	12/11/1998 9:38:00 AM
From: BigBull	Read Replies (2) \| Respond to of 95453

Tom L. Wells: Contra Platts Oilgram. It never ceases to amaze me how these kinds of articles flood the market place at market extremes. Any day now, I expect to see Time or Newsweek publish an issue with the following headline - "The Death of Oil?" Kindly, allow me to make a series of counter arguments to Platts thesis. 1. The conspiracy theory presupposes that the current Saudi regime will remain in power if they pull such a stunt. That is a dangerous assumption to make considering their own internal unpopularity and the number of very pissed off enemies they would make locally. Those enemies would have very little to lose in either sabotaging Saudi fields or starting a war in the Gulf. The world is a very different place from what it was in the fifties. The Iranians alone are now the proud posessors of a submarine fleet, courtesy of our Russian friends. Can you imagine were the price of oil would go if a US carrier was sunk in The Straits of Hormuz. 2. The article implies that current worldwide economic growth will remain stagnant. This absolutely will NOT happen. Why? The WORLDS central bankers are now in a war to see who can lower rates faster. The WORLD is now being flooded with CHEAP MONEY. The western powers (US, Europe, etc.) are all now dominated by SOCIALIST governments. If my recollection serves me well - SOCIALISTS LOVE TO PRINT MONEY! This means that a worldwide economic boom is in the bag. Even the Chinese are getting into the act. As I pen this missive the Japanese are in the process of injecting $500 BILLION (thats billion with a capital B) into their busted banking system. Greenspan must continue to lower short rates to open the spread so that US banks can recapitalize their foreign losses (remember LTC). 3. Unlike gold, when the price oil gets cheap, it gets used. I'll bet that gas guzzling SUV's are flying off the lot these days. Low interest rates and low oil prices - please - it's a no brainer. Ecommerce will engender oil demand, not reduce it. Yes, I save a trip to the book store to buy some books from Amazon. But that only serves to take my fuel efficient 4 cylinder off the road and put a 6 cylinder UPS truck on it. Duuuhhhhhh! Now about that vacation my family was planning, since the price of gas is so cheap we'll have a reeeeaaaallll good time burning lots of it up. And you can bet your bottom dollar I won't worry about keeping my thermostat down this winter. Hell, I've got the heat on right now, and I live in South Carolina. 4. Since late summer and through the fall, OS insiders have reversed their relentless and massive stock sales. They are now buying. They are buying across the industry. Guess maybe they know something Platts doesn't. D'ya think? 5. The last time I looked, 800 godzillion chinese have'nt dropped off the face of the earth. Thanks for your post, though. The more negative sentiment the better. The more onesided this market gets the more explosive the move up will be when it comes. In the mean time, I'm loadin' the boat!