Friday, September 08, 2006
More Oil Found, But Is It Enough?
With the sudden disappearence of Mort's Petropest Launchpad (whether
permanent or temporary, I don't know), I feel the need to cover this week's
announcement regarding a
"big discovery" in
the Gulf of Mexico. Oil prices have tumbled since the announcement, despite
continued sabre rattling with Iran. While oil is still about $67/barrel, it's
finally below the $70 mark, where it's been all summer.
Jim
Cramer feels that this may be the first of many such discoveries (oil in
geopolitically safe areas). While I'm not so sure that's the case, I do agree
with the point that previously cost-prohibitive finds will be exploited now that
the technology has come down in price and the dollars per barrel yield has
skyrocketed.
But is it enough? No, it isn't. We'll still have to import at least half our oil
(based on current demand). Even Cramer agrees that more finds are necessary.
Don't expect the calls to drill in ANWR to disappear anytime soon, though oil
conservation should still be the rule of the day.
And it will be at least 3 years before any oil starts flowing from this field.
Why so long? That's just how long it takes to go from discovery to sucking out
crude. The short term gain from this will be the current drop in oil prices that
we're seeing now. However, as soon as some new piece of bad news comes along
(more geopolitical troubles, hurricanes in the Gulf), expect another oil spike.
When the platforms are in place, there will be a drop in the price of oil, but
who knows what it's price will be in 3 years. If more discoveries like this are
made, then we might be able to avoid $100 oil, which is where Cramer and others
in the investment community believe its otherwise headed.
\_/
DED
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About Me
Name: DED
Location: United States
I'm a stay-at-home Dad who survived dotcom burnout and a
chemical engineering career that fizzled. While the kids are in school,
I'm free to write stories.
I'm a rational environmentalist, science and technology enthusiast, who leans
libertarian, reads and watches sci-fi, drinks and brews beer, and listens to
metal.
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