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

To: The Ox who wrote (38074)	2/23/1999 7:51:00 PM
From: John Carpenter	Read Replies (2) \| Respond to of 95453

Michael, Thanks for an informative, well substantiated post. Increasingly, the oil-service/drilling recovery of 1995-1997 is looking like an anomaly. Bear markets and sideways dead money markets are far more the norm than the exception for the oil-service/ drilling sector. John

To: The Ox who wrote (38074)	2/23/1999 9:57:00 PM
From: SliderOnTheBlack	Read Replies (3) \| Respond to of 95453

''Tit for Tat'' & you aint heard nuthin yet .... o/t - wow; someone sure is ''emotionally'' involved here - must have really hit the ''hot button'' <VBG> ! A deja vu/flash back - something about little Tommy the neighbor kid taking his ball and running home after striking out for the 14th time... damn kid never could hit the slider on the black (corner of the plate) ! ******************************************************************************* THE END OF CHEAP OIL by Colin J. Campbell and Jean H. Laherrère, Scientific American, March 1998 In 1973 and 1979 a pair of sudden price increases rudely awakened the industrial world to its dependence on cheap crude oil. Prices first tripled in response to an Arab embargo and then nearly doubled again when Iran dethroned its Shah, sending the major economies sputtering into recession. Many analysts warned that these crises proved that the world would soon run out of oil. Yet they were wrong. Their dire predictions were emotional and political reactions; even at the time, oil experts knew that they had no scientific basis. Just a few years earlier oil explorers had discovered enormous new oil provinces on the north slope of Alaska and below the North Sea off the coast of Europe. By 1973 the world had consumed, according to many experts' best estimates, only about one eighth of its endowment of readily accessible crude oil (so-called conventional oil). The five Middle Eastern members of the Organization of Petroleum Exporting Countries (OPEC) were able to hike prices not because oil was growing scarce but because they had managed to corner 36 percent of the market. Later, when demand sagged, and the flow of fresh Alaskan and North Sea oil weakened OPEC's economic stranglehold, prices collapsed. The next oil crunch will not be so temporary. Our analysis of the discovery and production of oil fields around the world suggests that within the next decade, the supply of conventional oil will be unable to keep up with demand. This conclusion contradicts the picture one gets from oil industry reports, which boasted of 1,020 billion barrels of oil (Gbo) in "Proved" reserves at the start of 1998. Dividing that figure by the current production rate of about 23.6 Gbo a year might suggest that crude oil could remain plentiful and cheap for 43 more years—probably longer, because official charts show reserves growing. Unfortunately, this appraisal makes three critical errors. First, it relies on distorted estimates of reserves. A second mistake is to pretend that production will remain constant. Third and most important, conventional wisdom erroneously assumes that the last bucket of oil can be pumped from the ground just as quickly as the barrels of oil gushing from wells today. In fact, the rate at which any well—or any country—can produce oil always rises to a maximum and then, when about half the oil is gone, begins falling gradually back to zero. From an economic perspective, when the world runs completely out of oil is thus not directly relevant: what matters is when production begins to taper off. Beyond that point, prices will rise unless demand declines commensurately. continued @ dieoff.org ***************************************************************************** << what matters is when production begins to taper off >> It's mystifying that we seem to forget history and more importantly fail to learn from past mistakes. We are living a grande illusion if we think we can manage production downward in a controlled, predictable and quantifiable manner. While OPEC's production goals are measured in BOE's of daily production; we see how ineffectual and unreliable current API/EIA numbers are - ie: the US Government investigation... **************************************************************************** <<(OPEC) was able to hike prices not because oil was growing scarce but because they had managed to corner 36 percent of the market.>> ...and with the shut down of all of the Globally uneconomic production and the delay and cancellations from the dramatically reduced Cap Ex budgets of the Oil Majors and International Independants; let alone the decimation of Domestic US production; we have a virtual repeat scenario of what happened once before... Is OPEC ''NOT'' in the marketshare -drivers seat once again ! - that they are - is virtually indisputable and is of Global Strategic importance and concern. ****************************************************************************** Add to that the all ready acknowledged unquantifiable effect of Global Cap Ex budgets by the Oil Majors & Independants and it is clearly impossible to downward manage any realistic production/supply models. The very real possibility of the downward knee jerk reaction creating a more dramatic supply shortage than the current glut, has all ready been acknowledged by International Governments, Economists and various Organizations. Only time will tell; but clearly history has shown us the virtual impossibility of micro-managing the historic cyclity of Crude Oil. Yes, indeed; the cure for low Oil prices is low Oil prices... Buckle up boys; it's going to be an interesting ride... Ciao