Posted on 09/05/2005 7:39:23 AM PDT by cloud8
PUBLISHING billionaire Steve Forbes has predicted that soaring oil prices will lead to a crash that could make the hi-tech bust of 2000 "look like a picnic".
Mr Forbes, publisher of Forbes magazine, said the price of oil, which peaked at more than $US70 a barrel on Monday as Hurricane Katrina headed for the US Gulf Coast, was unsustainable.
He said factors such as inflation and increased demand for oil from China and India accounted for only a small part of the price hike from $US25-30 a barrel three years ago.
"The rest of it is sheer bubble speculation," he said.
Mr Forbes, who was speaking at the opening of the Forbes Global CEO Conference in Sydney yesterday, said the higher the oil price rose, the harder it would eventually crash, creating more pain for hedge fund managers and their clients.
"I don't think it's going to go to $US100 but if it does the crash is going to be even more spectacular," he said.
"It will make the hi-tech bubble look like a picnic -- this thing is not going to last."
He predicted that oil would fall to $US30-35 a barrel within a year.
Mr Forbes's comments came as the price of oil eased following US Government comments that it could release some of its Strategic Petroleum Reserve.
The 700 million barrel stockpile is set aside for emergency use and could be used to counter oil shortages caused by Katrina's impact on the Gulf of Mexico, which accounts for about a quarter of US output.
After leaping nearly $US5 a barrel to $US70.70 on Monday, US oil futures retreated more than $US1 a barrel yesterday.
No, you don't understand. I'll leave you to just hate me.
What is "too high"? I don't know, but I bet we haven't reached it yet, too many folks in my town are lined up around the block to pay $3.19 a gallon.
It's a perfect time to press our legislators to do something about this.
You're right. I don't understand. You're not making sense.
Investment money to be drilled back into the ground. Nobody funds oil companies, nobody pays for their research, nobody does their prospecting for them, nobody develops their oilfield leases but them. They even have to build their own port facilities, refineries, and pipelines, and buy their own oil tankers. Who is going to pay for the $30 billion TransAlaska Natural Gas Pipeline?
They WERE and ARE prepared to reap windfall profits from this event.. They will MILK this cane' for all its worth.. Bad news for consumers is good news for oil companies..
The Oil companys are suffering all the way to the bank..
It is not the nature of business to act as a public utility. In Communist countries they nearly are public utilities, but then, they don't work well under a command economy even without hurricanes.
When it is due to deliberate manipulation of the market in derogation of ameliorative effects of competition on prices.
"Since when is a corporation making a profit "trouble"?"
{When it is due to deliberate manipulation of the market in derogation of ameliorative effects of competition on prices.}
Just a fancy way of saying you are a socialist.
Sorry, I embedded the links, but was in a hurry. A little quick cut/paste and you, too, can be enlightened.
Same that it has been since before the election. This fellow is a master at futures manipulation. He wants oil prices as high as they can be for as long as is possible to sustain. Anything to hurt Bush. The effects on the rest of us just don't matter as long as blame can be pushed to the evil republicans.
I am not saying you are wrong. I am against obscene profits.
I was only asking because when you say something on FR that may disagree with, it would be wise to directly cite the info right then so people can't question it.
I have been suspicious about the oil companies myself.
want more news links for your website ? check out my FR homepage
Sure, no problem. I almost missed the reports, myself. Heard them on the radio and my jaw hit the floor. All those weeks of "we're just passing our higher costs along" appears to have been a load of bull.
Your point's taken about giving a reference. That's a good thing to remember for the future. Since it'd only been radio reports, it allowed me to find some printed references of my own. Only made me angry all over again!
Seems like I touched a nerve with some FR folks. I am relatively new to FR and don't really understand the reaction. It's like I'm questioning capitalism, in general, and I'm not.
Anyway, thanks for the dialogue and lets hope things ease up, one way or another.
That make you feel good, you bastard?
It is inherently obvious you do not know diddley sh!t about me. For starters, I was the second child, and mommy and daddy were married before my older sibling was started...
Second, I am a consultant, not an owner.
While that distinction may be lost on you, let me put it this way. I only have work when we (the oil industry) are drilling oil wells.
Think about that.
Think about raising three grandkids and having YOUR paycheck completely dry up, and worse yet, having virtually everyone jubilant about it, even though you KNOW the time will come when they will have to pay more because the reserves they are depleting today are not being replaced.
Yeah, I feel good.
I can provide things for my family without worrying for the moment where the money is coming from.
Nothing exotic, just the basics. We have never had a new car, but it is nice for Grandma to be able to own a stove that has all the burners in working order.
I can afford to send the grandchildren we have raised from infancy to parochial school without having to apply for tuition assistance.
It is really nice for the loss of $50 to be an inconvenience instead of a financial crisis.
I can begin to replenish the savings which were consumed during the last price bust just keeping the lights on and food in the cupboard, while I went out and worked construction jobs as a laborer--in a glutted local labor market.
I live in a 1580 square foot house bought for $31,500, back in 1987, and built in 1912, not some Mc Mansion.
Remodeling can again proceed (like everything else, on a cash as we go basis), even though it costs extra to drive the 130 miles to the nearest equivalent of a Home Depot, because we buy gas at the same pumps as everyone else.
YEAH, I FEEL GOOD!
Think about being a patriotic American in good company in a highly conservative industry which is constantly berated in the media (Why do you believe them now?) for providing a strategic commodity, one essential to our county's national security.
According to the Socialist Media, we are evil for drilling at all (ecowhackos), and then evil for not having drilled enough!
This is industry, not some government program. If it does not show a profit for the investors it will not be happening long, if at all. If the prices are too low, no one is going to raise a derrick.
Think about spending long (12-14 hour) days on remote locations, sometimes not getting home for months.
AND YOU HAVE THE UNMITIGATED GALL TO TRY TO MAKE ME FEEL GUILTY ABOUT EARNING A PAYCHECK? YOU SNIVELING PISSANT, IF YOU DON'T LIKE THE PRICE, DON'T BUY IT! F'n WALK!
As for me? I am working, and I feel GREAT!
You will find that corps make charitable donations and other philanthropic gestures with a tax accountant looking over their shoulders. If limiting profits can be proved to increase the bottom line in some way, it may be the move to make, but that is rare. Throwing money away is a criminal offense(at least a civil offense).
Note that does not include preliminary expenses (title searches, leases, permits, reclamation bond, archaeological, rare plant, paleontological, rare animal or raptor surveys), nor does it include the cost of well stimulation, production equipment, pipeline or other operating costs.
Just earthwork, moving the rig in, drilling the well, running production casing and liners, and moving the rig out.
This is over nearly 20,000 feet, and only 40% of that will be productive, thanks to this being a horizontal well.
In a vertical well, you are fortunate to get 300 ft. of good pay.
Drilling costs offshore are far, far higher, and when you go somewhere like Saudi, workers live in company compounds to reduce problems with the local culture.
More expensive yet, but offset in part by the use of cheaper foreign labor in some of the grnt jobs.
Lift costs (the $1.50/bbl is Saudi) are just the cost of getting the oil out once the rest of this is in place.
They vary depending on the field, and often from well to well. Six dollars per barrel on average, sounds about right, but only factors in what it costs to get that barrel out of the ground (to operate the well as a producer), not everything required to put the well there in the first place.
In the last 5 years, the company I have been working for has spent over 100 million just drilling wells, (not counting preliminary costs or infrastructure/production investments).
My take over those 5 years? .00375, roughly, of the total drilling cost, paid as a day rate. Keep in mind that when I went back to work after the late '90s price crash, we all worked more cheaply than today (1995 rates), and day rates have gone up some, too (but not as far or fast as oil prices).
Some folks here just do not get that...
Interesting.
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