longoil

Bullish Amid Oil Majors' Lay Offs

The one good thing about collapsed oil prices is we are now mainly draining the reserves of hostile nations like Venezuela, Saudi Arabia, Russia, Iran, etc where the marginal cost of production is under $30.00.

Unfortunately, high cost producers like the Canadian oil sands and deep sea oil (i.e Brazil Tupi) have shelved many projects.

I concur with the opinion that when the economic crisis recedes, oil prices will skyrocket due to the heavily reduced investment in E&P.

Invest Now with a Keen Eye and Be Regarded a Genius for Decades

Oil is definitely the place to invest now. The chronic under investment in oil E&P coupled with the sky rocketing demand that will occur when the economic recovery has setup a perfect investment opportunity.

I like Canroys & MLPs. You get the best of both worlds
1) Steady dividends of 5% to 15% (even with sub $40 oil)
2) A nice capital gain when the price of oil rebounds.

Of course, services companies (DO, Pride, Noble, HAL, etc) will be major beneficiaries as well oil recovers.

Marc Faber, Jim Rogers and Boone Pickens - Bullish on Oil

Roger Knights said

>>>I wonder if the oil price is being manipulated down (by the gov't.) to clip Chavez's wings. If so, it may not bounce up as soon as the bulls expect.<<<

You would probably enjoying reading the "The Oil Card" by James Norman. The entire book describes in detail two interesting hypothesis's:

1) The US engineered the drop in oil prices in the mid-1980's to bankrupt the USSR.

2) The US manipulated oil prices upwards recently to stunt Chinese economic growth.

I don't agree with the author, but it was an interesting read.

60 Minutes on Oil: Did Anyone Verify Anything?

Excellent article Todd !!!

I wish 60 minutes would studied the underlying data as well as you did.

Experts within an inside view of things have been quoted as saying speculation had little to do with the high prices of the summer of 2008.

1) Alan Greenspan stated that internet stock and housing prices were indeed bubbles, but commodities (including oil) were not bubbles.

2) Henry Paulson stated that high oil prices were primarily driven by supply not being able to keep up with increasing demand. The lack of serious investment in new reserves and alternative energy is the chief culprit.

3) Jeff Rubin has many excellent reports and has analyzed outstanding oil futures positions and concluded that oil prices were driven by real demand and the speculator positions accounted for a very small part of oil prices.

Oil Stocks: Where Can You Find Black Gold?

Michael66,

I agree with you all on the new oil sources mentioned in your list, but you cannot lump them all in one basket.

Conventional oil (Sweet crude) has a marginal production cost (MPC) of production below $30/barrel.

Non conventional sources like the Canadian oil sand have MPC of $50/barrel and deep sea oil (Brazil Tupi fields) has an MPC of $70-90/barrel.

Same comment on gas production. Conventional loose gas is much cheaper to produce than tight shale gas.

As oil prices drop, investment in non-conventional drops off and more of the cheaper and easier to produce conventional stuff is used up faster.