Marshall Sohne

$125 Oil Not Sustainable for the Time Being

Im in Real Estate Ive been in it for few cycles the bubble aspect of the business (or at least the prices) is kind of like musical chairs you play the game but in the back of your mind you know the music will stop and you hope you end up with a chair. Ive done ok and so far Ive been lucky. Energy especially oil and gas has been relatively cheap for a long time. I guess we as country ignored or at least sat by and failed to play heads up to the changing world. Cheap energy thats yesterdays news. Going forward at least for the near to middle term energy is going up. It will go up to what ever price balances supply and demand. This is energy , plenty of oil and gas it just a question of price. Oil can be made synthetically out of coal or natural gas but we are no longer going to be just reaping the low hung fruit. The prices as we know are determined at the margins. The prices are also going to be determined by worldwide demand and competition. And while it is clear that the high prices are causing some demand destruction in our country. There are many developing countries where the dynamics of their economies are causing more demand so that net demand overall may not be abating. Supply has at least flattened oil pools deplete overtime the low hung fruit the easy oil supply is depleting. Deep oil, tar sands, shale, coal gassification require more effort , more energy, higher costs. What price should oil be ? What price should water be ? What price for food? I dont believe new supply will come on line for less than whatever it costs to produce thats just how it is ? If we are short supply than it gets allocated by who ever bids the highest. Thats where we are right now. So over time we get new supply to satisfy demand assuming higher prices create incentives at the same time we have demand destruction to the extent needed. Ok Oil is more expensive than it has been. Is it a bubble ??? we will see I am no expert but where is all the ready supply hiding ? I see the demand destruction but worldwide i guess these high prices have some more work to do ? Hopefully all the demand destruction wont just be pain but will guide us to alternate life styles and technologies. They say necessity is the mother of invention. For disclosure purposes I own a bunch of PWE both for the yield and I would have thought It would have moved much higher with oil and gas prices at this level. I have no expertise with stocks but it seems that PWE has the cash flow, controls some low hanging fruit that I expect to go up in value and I am willing to take the risking of receiving their double digit yield while watching the worlds economies clean up the mess we are in. I also read David Bui comments on Seeking Alpha I dont think he is bashing PWE. His comments appear well thought out and fair. If it is disturbing than maybe one should seek the answers to his questions. Im still holding on to my shares I think the fundamentals and pricing over power nuances raised by his questions. But Id like to hear the answers in any event. Transparency is important.