Anandakos

Crudomania Is Over

"Since we don't seem inclined to drill here"? Where to start?

Well, how about that fact that there are about 3 million oil wells that have been drilled throughout the world and that 2.5 million of them are in the US. We started first, jumped WHOLE HOG on the train, and poked holes nearly everywhere in the lower 48 that wasn't exposed basalt.

Yes, there are tight rock formations within the US which can yield commercial flows using horizontal drilling and fracturing. Thank goodness for that, because the enormous fall in the price of crude oil has been driven by a drop in consumption of only about 4% worldwide. Given the trajectory of usage by developing countries over the past twenty years, that four percent will be taken up within 18 months or so. Make it 24 because China is in an economic funk right now due to the collapse in exports to the US.

The OPEC exporters buy more than twice as much from Euro and other non-US currency using economies. Do you think that they are going to continue to price oil in dollars forever? The demand for dollars is about to plummet when the de-leveraging crisis wanes, and if oil is no longer priced in the dollar, it will cease to be the world's primary reserve currency. If the Saudi's were smart (and I think they are) they would demand payment in another commodity for their irreplaceable treasure. I think they will, and I think that commodity will be gold; they love it almost as much as do the Chinese and Indians, and it just makes sense to trade one commodity for another. It requires much less storage than most do.

So it's a darn good thing we still have a little bit of crude locked in rocks in the United States; we're going to need it to grow the food we'll need to power our bicycles.


On Jan 06 09:17 AM whisperonthewind wrote:

> Oil is not just gasoline, it is used for way too many things for
> us to stop using it any time soon. Since we don't seem inclined
> to drill here, we must continue to buy it elsewhere. While the price
> of oil was sinking fast, I was picking up a little more here, a little
> more there, and collecting dividends, reinvesting them, and finding
> extra cash here and there to buy a little more. Now, with the price
> of oil up from it's vacation in the 30's, I'm at a happy place.
> It can stay at 50 or go to 75, and I'll buy the gas I need, and heat
> my home, and pay the higher prices because my investments are going
> up at a much faster rate thanks to those low 30's. And when we figure
> out how to replace oil completely, I'll invest in something else.
> Maybe tulip bulbs.