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JREwing
146 Comments
We're Nearing Crunch Time for Oil
We're Nearing Crunch Time for Oil
Why Exxon Still Denies Peak Oil
2. In general i agree with Matt Simmons' view, although he is a little to gloomy, for my taste. No one is ever going to be able to exactly pinpoint 'Peak Oil', because there is always the chance of a new big discovery, helped by ever advancing exploration&produc... technology and know how. Although the size of the new Tupi and Carioca fields have yet to be proven, they are good examples for this.
3. They 'majors' are unimportant, because they are no 'majors'. ExxonMobil, although perceived by the Joe Public as a new 'Standard Oil' on a global stage is a midget with not even 3% of the daily world oil output.
4. Size DOES NOT matter. Smaller outfits like OXY are far superior when it comes to E&P. There are no more big projects, at least not for privately held oil companies, and the majors are too big to be effective in this environment.
Their business model is broken. Unless they split up their companies, they are going to be mostly refining and chemical companies, ten years from now.
5. For those guys up there citing numbers and statistics from the IEA and what not. These are educated guesses at best. I don't know what the exact world oil production is, but so does NOBODY!
For example: No day goes by without somebody saying or writing in the media, that Saudi-arabia has 3 million barrels spare capacity, but 'they just won't give it to us!'. That is so ridiculous. With the exception of the two embargoes, they pumped what they could no matter how dirt cheap oil was. Every OPEC member always pumped over their quotas, for the simple reason, that most OPEC members are disgusting regimes, who need the oil-revenues to calm down their peoples. I am old enough to know that folks don't change that much.
6. The 'Real Majors' are the state run/owned oil companies of the world. With the exception of Petrobras they all seem to be either badly managed or taxed to death.
Take the Russians for example: They didn't just run out of new potential oil fields, when announced last week, that they are unable to increase daily production levels. The Russian government obviously thinks, that they can tax with impunity. As of next week they raise the export tax once again by 17%.
In the case of PEMEX, there seems to be both the fact, that it is Mexico's piggy bank and a lack of deepwater know how.
7. All in all the world oil industry suffers from at least 25 years of underinvestment and that means, that it must invest that much more now. For governments, like the US government, it means that they have to ignore silly environmentalists and drill in any damn place there is. If Brazil can find oil in under their OCS, so can the United States.
We're Nearing Crunch Time for Oil
Folks never see the fact, that speculators are also responsible for low prices, as shown impressively on fridays short covering rally in oil.
First of all, every investor is a speculator. When you are 25 years old and you invest for your retirement you 'speculate', that when you are about to retire your investments will have done well.
Second of all, futures trading, which is used to 'speculate' in oil for example prevents price shocks like in the 70s. By anticipating shortages they drive up the price and give the economy a chance to adjust to higher prices and use oil more effective and give oil producers an incentive and the capital to invest in more production.
The same thing goes for every other commodity.
As for the dollar/oil relationship: Friday showed, that dollar appreciation or depreciation has not as much to do with price of oil, as most people believe.
Oil rallied, because it seems clear, that the economy is not falling of a cliff and has a good chance of a second half recovery. Both the USD and oil rallied. That Turkey/Northern Iraq situation and the pipeline attack in Colombia may have supported a little, but the bulk of the rally was on the back of economic data.
P.S. The article was very interesting. May be we can have an article by someone, who's smarter than me, about wether speculators are more harm than good or, like I believe, the other way around.
Oil Closing in on $110 Support Level
Oil Closing in on $110 Support Level
Bespoke's Commodity Snapshot (5/1/08)
Crude Oil Inventories
Options Trader: Thursday Thumping (for Exxon)
Energy's Surprise Party
So what if it takes 10-15% of commodities. That doesn't change the supply and demand picture one bit.
Crude Oil Inventories
I never denied that there are corrections like this. In fact i like them, because I can buy my drillers at a discount.
So, in the short term you are right. I give you that.
Energy's Surprise Party
News That Moved Wednesday's Market
A recession is two negative back to back quarters. Always have been, always will be that way.
The only reason some snake-oil-salesmen on TV think, they need to change that, is, that the samesnake-oil-salesmen predicted the economy would fall of a cliff and take on depression like character. Now that this isn't happening they redefine recession.
Ridiculous.
I find the whole argument 'recession or not' futile. One should look for companies, that perform and dump those, who don't. Period.
The rest is simply a justification for the existence of financial TV.
Petroleo Brasileiro: Reality Begins to Bite
Crude Oil Inventories
'Uh, the only thing they ever do is printing money.' Than what did the ECB do? Sure, they didn't cut interest rates, but they provided banks with hundreds of billions of Euros in liquidity. Every country prints money, when their economy or financial system is in the toilet. Even Jim Rogers' beloved Chinese are gonna print money, when they run in their first crisis. Hell, look at the Canadiens, they have more Commodities than most countries, they provide the United States with a lot of oil, and still manage to have to cut interest rates. And if the Germans ( full disclosure: I am one) wouldn't hate inflation so much, you can bet, that the ECB would have cut as well.
So, the US is in a bad fix, because the US economy is so inefficient in their use of energy. That is going to change, one way or the other.( It is about time, Americans fall in love with the turbo diesel. 70 miles a gallon, love it. Goodbye stupid Biofuels. Cost more energy, than they provide and are more responsible for inflation than Bernanke ever was.)
And when the pain gets big enough, the US will finally start to drill in ANWR and the OCS. They are gonna stop, using Nat-gas for power generation, and use nuclear, clean coal, wind and solar, instead.
Incompetent airlines will hopefully go under and make way for competitors, who don't have to whine about jet fuel prices, but can afford a modern, fuel efficient fleet. ( Get rid of Chapter 11; broke companies should be wiped out and only used for 'spare parts', at best.)
As, for Europe. Ok, they are more fuel efficient. But they import all of it. The North Sea has peaked some time ago. Britain became an oil importer. The bulk of their oil and gas comes from Russia, which is peaked, as the commentator above wrote. So, the Russians are friends with no one but themselves and simply want the best price for their product. I don't blame them. I would do the same damn thing.
The problem for Europe is, that unlike the United States, they lack the military capabilities to back up their energy needs and secure their supply lines of virtually every commodity there is. There is no country in Europe with a fleet capable of doing that. In fact, they have no strategic capabilities, whatsoever. Poetry-socialists may like it not, but in the end it comes down to just that.
To make a long story short: Europe is still totally dependent on the United states, when it comes to their security needs. And even if Europe had those capabilities, they lack the guts to use it. I mean, Germans have a heart attack every time on of our guys in Afghanistan is involved in a traffic accident.
There is an interesting STRATFOR article about how Japan, South Korea and China build up their strategic capabilities.
www.stratfor.com/weekl...
There is no reason at all, to be bullish on Europe. It is a demographic disaster happening and it is ruled by socialists, yea even so called conservatives are socialists, when it comes to economic policy. I call them Christ-Communists. Once their tax revenues exceed their expectations by five bucks, they spend ten on some 'present' to the 'little people'. National debt is just as disastrous than in the United States, private households are not much better. 10 % of all families in Germany are unable to pay their debt. Infrastructure is just as old than anywhere else. It took them 30 YEARS, no sir, I'm not kiddin', 30 years to get permission to build an additional runway for the Frankfurt airport.
So if i had to choose where to invest, Europe or the United States, I choose the US over Europe any day of the week.