PBH / off topic: do your thing (travelguide, pictures) / post

Cost of petroleum

Anyone care to give me their analysis. Two things I know to be NOT true is that there is a shortage of crude and that there is a shortage of refining capacity. With no end in sight of rapidly rising prices where will it end?

Shopping for floor tiles yesterday a distributor told me that the rising transportation costs are beginning to make domestic products competitive with foreign products.

A lot of the tiles I looked at were made in Colombia, Brazil, and Italy. He has already altered his stock to more domestic than imported.

t

By lpdiver on Apr 20, 2008, 04:24 in Off Topic. AddThis Social Bookmark Button


Dan says on Apr 20, 2008, 05:03:

I would hope you find your tiles so that you don't end up driving everywhere using up more of that precious fuel.

God Bless America!

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lpdiver says on Apr 20, 2008, 05:35:

Gee I wasn't aware that my six mile journey had such an impact on world economics! I guess I should have walked.

t

"cook some rice!"

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Ctg Bound says on Apr 20, 2008, 06:03:

lpdiver,

In my view there isn't enough crude coming to world markets presently, the refining capcity is less of a problem

Speculators have also pushed the price up, but not by that much I feel, otherwise there would be larger inventorys.

Most of the driving force in the oil price, is in Asia and to lesser extent the Middle East, the rising price in developed Countries will help to keep oil consumption down there.

BUT in Asia and the Middle East most people don't play the real price for the oil products, the governments pick up the majority of the tab of the increase in oil, plus they have rapidly expanding economies which is sucking in more oil.

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Lowell says on Apr 20, 2008, 06:44:

We're all just puppets under the control and direction of a few groups. I doubt if I'll ever own a car again. I'm lucky enough to be able to walk to just about everything I need. Actually, I'm liking not having the headache of owning and operating a car. Much more relaxing.

Alfred E. Newman. "What. Me Worry?"

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lpdiver says on Apr 20, 2008, 06:56:

I heare you Lowell. That is one of the attractions of Colombia for me. I would like to construct a residence and not be connected to the grid. I think it would be much easier in Colombia than many locations.

t

"cook some rice!"

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panthdave says on Apr 20, 2008, 07:41:

Moto for me............

panthdave Miami

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goin_south says on Apr 20, 2008, 07:46:

If my colombianita should decide to go the artistic route, as for new career... and say, learns to do pottery, for example... could it then be marketed as "Colombian Pottery"? jaj.. something I learned last week was at a premium here where I live.

Ciao! Gustav. Bienvenitos, Ike.

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lpdiver says on Apr 20, 2008, 07:52:

there is a flea market...

"cook some rice!"

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miamimike says on Apr 20, 2008, 08:44:

Weak Dollar,,,Oil is priced in USD and the ME ARABS AREN'T GOING TO LOSE a Penny as the Dollar tanks. I get by with my Honda Scooter that gets 60-70 mpg and my VW Diesel Car that gets 37-54MPG. The price of Diesel is a Killer here in Miami at $4+ per gallon. Thank God I don't visit the Gas Stations often, besides Diesel has approx 30-40% more energy per gallon.

"Wait a minute. What did you just say? You're predicting $4-a-gallon gas? That's interesting. I hadn't heard that." -- Feb. 28, 2008 --George W. Bush, Washington, D.C.

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vladimiro says on Apr 20, 2008, 08:46:

Oil prices are still much lower than they should be in my opinion. The world powers have gotten away with paying nothing for oil for far too long. Their economies can handle higher prices.

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Ctg Bound says on Apr 20, 2008, 08:48:

miamimike,

I don't think its important what the price of oil is quoted in, that is just a cover up to make as much as possible.

In the short term it will work fine for them, but in the long term it backfires as more money will be invested in alternative fuel sources.

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slguy says on Apr 20, 2008, 08:52:

vlad is always good for a contrarian, often century old, POV.

Before you throw me out, make sure I pay my bar tab

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lpdiver says on Apr 20, 2008, 08:56:

Contrarian...I like that word...I will adapt it for my daughter...

t

"cook some rice!"

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vladimiro says on Apr 20, 2008, 09:03:

Keep in mind that Coal still provides much of the world's energy. Alternative sources won't reduce demand for oil but rather address some (only a fraction probably) of the increasing demand as the world population grows and developing countries become industrialized.

The largests investments in alternative resources are going into the development and transportation of natural gas to Europe and Asia. The world's largest natural gas supplies are located in Qatar,Iran and Russia. New pipelines are being built from these countries to supply Europe through Central Asia, and Turkey, and to supply China/India through Pakistan.

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Ctg Bound says on Apr 20, 2008, 09:13:

vladimiro,

You are talking about the present fuel source "natural gas", I don't count as an alternative source, alternative fuel sources will come along to replace them over time, like grass and oats for horses, was replaced by gasoline for cars.

Those alternative fuel sources are less likely to come along if oil is cheap as there is limited incentive to do the research, but with a high oil price its a differant story.

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adrimm says on Apr 20, 2008, 09:31:

http://www.kshitij.com/research/petrol.shtml">

from: http://www.kshitij.com/research/petrol.shtml

edit: looks like the image insert link doesn't work, but it shows petrol prices in different part of the world, from 2006 to 2008.


edit: take 2 this one is from a 2007 edition of WIRED magazine:



sourcel: http://peoplesgeography.com/2007/06/18/world-petrol-price-comparison-i...

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vladimiro says on Apr 20, 2008, 09:48:

I agree that high prices might spur research into alternative sources, but don't think it will make much difference because of increasing demand. I guess it depends on how far in the future you are talking about(50 yrs, 500 yrs, etc) but like I said Oil did not replace Coal, and fungi or corn or whatever is not going to replace oil in our lifetime.

There are huge quantities of untapped natural gas deposits lying under the ground waiting to be developed and transported to Europe and Asia. That's where most of the alternative energy investments are going as far as I know.

For the factories in China that have to close periodically due to a lack of energy I don't think it matters whether the energy comes from coal, oil, natural gas, etc as long as they can get their businesses running again.

If chinese businesses have the choice between betting on an alternative source like fungi and the huge untapped natural gas reserves located in nearby central asia where are they more likely to invest?

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Ctg Bound says on Apr 20, 2008, 10:03:

vladimiro,

Just decades, if the price stays high or goes higher, although it will take a while for gasoline to disapper, not oil itself as that is used in many other non fuel related products.

Corn, is a temporary fuel source and within a decade I expect won't be being used as a fuel source as it just isn't worth it from a financial stand point, but be replaced by ethanol from corn stalks and other farm generated waste.

Alternatives to me are nuclear power, wind power, wave power, solar etc. not gas, but those will only take up some of the fossil fuel usage, other alternatives that we don't think about will come, like using the earths magnetic field or something else like that which today is science fiction but a reality to others.

Just look at the huge strides in development over the last 20 years, let alone 50 years.

The factories that were closing in China due to energy problems were self inficlted due to the Chinese government closeing down some of the dirtier coal power stations, plus a cold snap.

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peteyw says on Apr 20, 2008, 12:07:

vladimiro is correct in many of his observations. There is nothing that will replace oil in the foreseeable future. Alternative fuels don't produce the energy output that oil does. At best, alternate fuels can replace a maximum of 7% of petroleum based energy sources and during the time it will take for that to happen, the world's population and energy requirements will have increased 25%.

Oil is the Big Dog.

That being said, there's good news and bad news in all this if you are an American or Canadian...

The bad news is that we are, as Lowell accurately put it, "just puppets under the control and direction of a few groups". These groups pull the 'energy strings' and we play along. They win all the time.

The good news is that the U.S. and Canada have more oil than all the OPEC countries put together (over 70% of this is on the U.S. side of the border). Proven reserves waiting to be tapped. Sufficient oil for both countries to not just be self-sufficient, but to be the biggest oil EXPORTERS. Where is this oil? Why do we import and pay ridiculous prices for foreign oil? Why hasn't this been reported?

Why? The "few groups" Lowell refers to have a long-term strategy to consume all the oil for the other producing contries while claiming that our oil is too expensive to reach or that tapping it will affect the mating habits of a Duck or a Squirrel. Then they use the media to convince you that we have no oil, must import and that Ducks' sex needs are worth untold billions of dollars spent on imported oil, most of which finds its way into the already fat pockets of these "few groups". Once the oil of the other producing countries has been consumed (about 10 to 20 more years), then the U.S. and Canada will have the entire world on an energy leash. Its actually a brilliant strategy from a Geo-Political perspective as well as a simple profit scheme.

This is one reason why the Chinese are desparate to purchase a US oil company; they want access. They know if the US controls the World's oil supply in 20 years, they are at our mercy and they won't have that happen it they can avoid it (they can't, its inevitable).

Where? The oil is shale oil. Stretching from Colorado to Canada are the largest proven reserves of oil ever located in history. It is larger than all the other proven reserves of oil in the world put together. Its enough oil to keep the energy needs of North America going for the next 150 years. Its enough that we could charge $1.25 at the pump and still make a profit, if they choose to do so.

Now, this is no great secret. The oil shale was discovered decades ago. While its discovery allowed for the strategy mentioned above to be played out; its equally important that this oil NOT be brought to market too soon. It must wait until the other sources of oil no longer support the world's needs.

Therefore two explanations were introduced. First, that shale oil is too expensive to me produced unless the price of oil reached $100 a barrel!! This explanation was thought of when oil was $17 a barrel and no one thought it would reach $100 this soon. So now the explanation doesnt' work.

The other explanation was that we don't have the technology to produce it. Hogwash; we walked on the moon 40 years ago, we can certainly separate oil from rock. Mobil is doing it in Colorado as we speak on a special approval from the Bush Administration. The Canadians are not waiting; they are refining now. The technology is there, the challenge is to decide which of several methods is the least disruptive to the environment while being the most efficient and profitable. This is being done slowly (on purpose).

In the meantime, the special interests continue to rack up profits that would embarass Midas. We pay through the nose, but don't worry, there will always be high octane, unleaded for your 2 ton SUV.

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Ctg Bound says on Apr 20, 2008, 12:33:

peteyw,

It would depend what you mean by "foreseeable future."?

From my understanding of things, the Oil Shale reserves are mostly blocked by the enviromenmtal lobby NOT people making money off imports, those same people could make money of the shale deposits, much the same as the conventional reserves in Alaska are blocked by the enviromenmtal lobby.

Canada is rapidly expanding its oil sands (shale) deposits, even though the price of extracting a barrel of oil from them now has gone up dramaticly, they are selling most of it to the US.

The article you are getting the information from is rather dated, the costs of extracting the oil from the shale is several times higher now, I think it is something like $45-65 a barrel off the top of my head.

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Frank Rizzo says on Apr 20, 2008, 12:36:

Wouldn't this help lower costs..

http://blogs.moneycentral.msn.com/topstocks/archive/2008/04/10/north-d...

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Ctg Bound says on Apr 20, 2008, 12:42:

Frank Rizzo,

Possibly but unlikely from my understanding, the main problem with the high costs at the moment is lack of skilled employees and equipment in short supply.

If more came on line now, the above would be even worse.

There are other costs involved that have gone up like gas, but the above is the main problem, which I can't see coming down in price over the next few years, unless there is an oil bust.

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Dan says on Apr 20, 2008, 12:48:

Frank: I would think that it would help, but then again, if prices get lower, the big companies would complain that they're not making as big of profits.
I know there was a big issue about drilling in Alaska.. maybe that would turn out to be a better alternative and knock down those gas prices down a bit.
I was telling someone at church this morning that with the way gas prices are going, you'll just about have to donate blood in order to afford the prices... I guess women are luckly, they can get paid more for donation of eggs... (if I remember right). I wouldn't be surprised at this point if people are already coming up with ways to afford with the higher prices.

God Bless America!

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peteyw says on Apr 20, 2008, 13:08:

The only thing keeping us from the oil shale is the desire to do so. The price comes down when the economy of scale kicks in after we go after it aggressively. My info is not from an article, but industry sources. Remember, they have the media in their pockets; the media is one of the main tools to keep you a puppet.

Let's use your recall of $45 to $65 a barrel. This cost is because Canada and the US are doing it on a very limited scale now (for geo-political, not environmental reasons...the environment is the a 'fall guy' in this).

Liken this to any new consumer electronic gadget. Let's say a new 50 inch flat plasma TV is $7,000 or more, the very first year the technology is available. Once consumer demand and economies of scale kick in and the companies have re-couped their R & D investment, suddenly a few short years later that same TV new is $1200.

Now let's assume Canada is now producing at the midpoint of the range Ctg Bound qouted, or $55 a barrel. That is less than half of today's price of $117 a barrel and you only have to move it from Canada not half way around the world. So if a gallon is now $2.69 at the pump in Chicago (from $117 a barrel oil), then you can sell that Canadian oil in Chicago for $1.30 a gallon at the pump (from $55 a barrel oil) if you desire. And that is today.

Now, just like that flat plasma TV, if you can produce for $55 a barrel with limited production today; your cost will drop dramatically with full-scale production. Also, keep in mind, the biggest added cost to the price of gas is the EXPLORATION costs that the oil companies factor in. The same as the pharmacuetical companies factor in Research and Development costs and the expense of getting governmental approval into every pill they sell. Here there is no added exploration cost because everyone knows exactly where the oil is.

The environmental issues will be weighed against the 'greater good'. And just like the governments moving Native Americans to reservations in the 1800s in the name of the 'greater good'; they''ll find a reason to do whatever is neccessary when the time comes to get that oil. And no bird, rodent, or tree will keep them from trilllions of dollars. Make no mistake about it.

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Ctg Bound says on Apr 20, 2008, 13:31:

peteyw,

It is hardly on a limited scale in Canada, its over a million barrels a day, with plans in progress to take it to 3 million barrels a day.

Some projects have been put on hold hold due to the rising costs lack of skilled employees and equipment in short supply pushing up the prices.

Comparing a manufactured project is not the same I am afraid.

Your maths is out as they would have to include transport, tax etc.

BUT ABOVE ALL, the oil price depends on what the market price is, some Arab Countries can extract oil at about $10 per barrel, they don't then sell it for $10, they get the market price for it, just making more profit due the oil being easier to get at and a better quality.

The biggest cost of gas or oil is NOT the exploration cost, but actually getting it out of the ground and then to the market in the requied form.

If the biggest cost was the exploration cost, why would oil fields and small exploration companies reguarly change hands, with undeveloped oil fields resources sell in single $ figures for each barrel of oil they have in them.

I do agree once it comes a necessesity the goverment will over rule the enviromental lobby, but who will be the people then or now if they could extract the product, BUT the same ones who are making the money now, will be making it then, so I am afraid I just don't see a large conspiracy theory.

Also why would the people involved with this large conspiracy let oil go down to $10 a barrel or there abouts for several years, thus loseing a huge amount of money?

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miamimike says on Apr 20, 2008, 14:21:

I started getting involved with Diesel Motored Cars 5 years ago and bought my present&last Diesel 4 years ago, just before the Iraq Crusade began. I had a hunch Oil Prices were going to get all mucked up due to that war as well as for other reasons including demand in India and China. So far I have not converted to Waste and/or Straight Vegetable Oil which can power a diesel car after a 5 minute startup/shutdown on Regular Diesel. My Breaking Point is $5 per Gallon and then I convert,,,and it looks like that time is near as Diesel now in my area is selling for $4.25 per gallon. Cost for WVO in my neighborhood $0.00 per gallon except for some elbow grease in collection and straining the product. The WVO Conversion Kit for my car sells for around $1200 so at $5/gallon, the payback doesn't take long. The ME OIL Shieks can then go to Hell,,,

"Wait a minute. What did you just say? You're predicting $4-a-gallon gas? That's interesting. I hadn't heard that." -- Feb. 28, 2008 --George W. Bush, Washington, D.C.

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lampltr says on Apr 20, 2008, 14:32:

lpdiver, , you stated, "Two things I know to be NOT true is that there is a shortage of crude and that there is a shortage of refining capacity." I do not know about the second half, but the first part, I believe it is Saudi, that is pumping in sea water to keep the pressures up to pump this crude up to the surface, my question is why this is needed?....U.A.E. see's the future and is striving in other means to gain global profits, they seem to be the only smart ones around. China and India are quickly sucking up these global resources ahead of North America. The U.S. was never concerned with its neighbor to the north until China came in under the U.S.'s nose and signed a lucrative contract with Canada to run taps there as well as with Chevez....

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Ctg Bound says on Apr 20, 2008, 14:59:

miamimike,

Yep the higher the oil price goes the more other options come available.

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peteyw says on Apr 20, 2008, 15:12:

Didn't say the biggest cost was exploration. I said the biggest 'added' cost of gas (gasoline, the refined product), meaning after the cost of getting the oil out of the ground, is exploration fees. Those fees are how the oil companies justify their profits (read recent congressional testimony to confirm).

A million barrels a day to 3 million barrels is very small scale when you have 3 trillion barrels. Its a drop in the bucket. You must wrap your mind around the enormity of this gift, this resource we have at our disposal. Its just being hijacked for the narrow political purposes and greed of a few.

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Dan says on Apr 20, 2008, 16:06:

Check this out:
http://news.yahoo.com/s/ap/20080420/ap_on_bi_ge/italy_oil_prices

"Oil prices would go higher regardless of supply"

God Bless America!

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goin_south says on Apr 20, 2008, 21:08:

Rizzzooooooo.... & Co.

I reported just about a week ago, that a client came to my office (here, in So La) and said her husband just returned from North Dakota... FINALLY.. He's been 'setting up rigs' for the past 3 or 4 months... in... N.D.... for a local oil company. She further said: the same company is buying land left and right, for dual purposes: of course, first and foremost, EXPLORATION... and secondly, to BUILD COMMUNITIES... to house the people who will SOON BE COMING.. FOR THE BOOM.

I'm never sure about any government... but these (relatively small) large local oil companies seem to be 'in the know' about this expedition that is coming soon, IT'S HERE RIGHT NOW...

She further said... THEY CAN'T GET QUALIFIED PEOPLE TO GO and WORK ....AND STAY... North Dakota ain't exactly the World's Most Desirable Place to Live.

Ciao! Gustav. Bienvenitos, Ike.

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goin_south says on Apr 20, 2008, 21:10:

"Oil prices would go higher regardless of supply"
I wouldn't bet against this. It's kinda like they 'got us over the barrel', eh?

Ciao! Gustav. Bienvenitos, Ike.

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gold digger says on Apr 20, 2008, 22:51:

There is so much oil in the waters off of Florida that it bubbles right out of the ground. I seen it with my own eyes. I guess they are saving that until they really need it.
When the time is right to drill the oil, the environmental groups will be trampled over and told what to do.
Miamimike- I'm getting a diesel to run on SVO soon also. Make a small batch of bio-diesel to use for warm up/shut down instead of diesel. Keep all the money you can in the USA. I hope everyone knows that the profits from the oil is funding terrorist groups in the middle east.

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goin_south says on Apr 20, 2008, 22:56:

hope everyone knows that the profits from the oil is funding terrorist groups in the middle east.

YES.... godldiggr... that makes alot of sense.... mus b medaloblan.

Ciao! Gustav. Bienvenitos, Ike.

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goin_south says on Apr 20, 2008, 22:57:

but,.............. U could be right.

Ciao! Gustav. Bienvenitos, Ike.

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tomtom33 says on Apr 21, 2008, 02:56:

Hey, my father was born in North Dakota. He used to say that no people lived in ND. There were only Indians and Norwegians. Winter can be a bitch, but you can say that about a large part of the northern US. No mas nieve para mi.

I will be going up near the Fargo area this summer for a family reunion. That is absolutely gorgeous country - in the summer.

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Timba says on Apr 21, 2008, 07:06:

It should not surprise anyone that the most profitable company is Exxon. It also has earned record profits in a year and in a quarter.

It has been suggested by oil analyst and oil executives that there is a large speculation/hedge fund premium in the price of oil.

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miamimike says on Apr 21, 2008, 07:19:

Gold Digger-Offshore Reserves have also been found In Cuban Waters but Thanks to that stupid US/Cuba Trade Embargo, US Oil Companies are Not allowed to join in these new deals. Not that they don't want to and are lobbying Washington hard this very moment to Drop the Embargo and let US Companies do Business as the Chinese and Canadians already are doing. On a Stupid Scale of 1-10, maintaining this Embargo ranks around a 12. A small vocal minority of Right Wing Extremists in Miami are dictating US Foreign Policy and hurting our Economy in ths process.

"Wait a minute. What did you just say? You're predicting $4-a-gallon gas? That's interesting. I hadn't heard that." -- Feb. 28, 2008 --George W. Bush, Washington, D.C.

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tomtom33 says on Apr 21, 2008, 11:42:

"A small vocal minority of Right Wing Extremists in Miami are dictating US Foreign Policy and hurting our Economy in ths process."

Do I agree with that. When I was in Havana in Jan. of 2004 as part of a university exchange program, we were asked by our hosts why the people of the US wanted to continue the embargo on Cuba. I told them that the people of the US wanted nothing but the best for Cuba and that it was the Cuban ex-pats who were forcing the embargo on everyone. They refused to believe me.

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BillBigD says on Apr 21, 2008, 15:46:

North Dakota oil reserves- Some of these fields were discovered in the late 1950's. The largest company that is doing work out there is EOG. Look at what the stock has done in the last 6 months. About 3 months ago they said they found a huge oil find there.

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goin_south says on Apr 21, 2008, 16:01:

$77 to $137 since Oct '07 ain't bad.... where are all the pbh financial gurus??

Ciao! Gustav. Bienvenitos, Ike.

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goin_south says on Apr 21, 2008, 16:08:

Interesting reading:

http://articles.moneycentral.msn.com/Investing/SuperModels/DakotaOilPe...

Ciao! Gustav. Bienvenitos, Ike.

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gringoloid says on Apr 21, 2008, 17:24:

GS............oil went from $1.30 a barrel in 1970 to $35 a barrel in 1982, a 26 fold increase.

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BillBigD says on Apr 21, 2008, 17:58:

GS-Not bad?
gringo-But it did go back down to $10ish. LOL Maybe it is different this time.

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gringoloid says on Apr 21, 2008, 18:12:

bill............i just think it is going upwards for awhile............whether it hits $150 a barrel by 2010, I don't know, .....lot of people here tell me i'm wrong.

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goin_south says on Apr 21, 2008, 19:03:

I think you're right (unfortunately).. because it's a different game, it appears, now.
The oil co's are driven to perform for shareholders, NOT CONSUMERS.
I think the only hedge against higher prices is investing in this energy sector

Ciao! Gustav. Bienvenitos, Ike.

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gold digger says on Apr 21, 2008, 19:33:

Here is part of an interesting article that I read:

Gas and oil prices are currently at an all-time high - OPEC sets the market price. Woolsey says Saudi Arabia is using a chunk of its oil wealth to spread its brand of radical Wahhabi Islam worldwide.

"The Saudis control about 90 percent of the world's Islamic institutions," he says. "And oil is the reason for that."

Iran's big oil profits mean big money for that country's nuclear program and its terrorist proxies, Hezbollah and Hamas.

Lately, Iranian Pesident Mahmoud Ahmadenijad has been joined by Venezuela's Hugo Chavez in threatening to help drive oil prices up even further.

full article: http://www.cbn.com/CBNnews/356986.aspx

I don't think we will be seeing low oil prices again. The difference between the past and present is that before, the USA could lower oil prices by just not buying that much, which would lead to a surplus of oil and the prices would lower but now China,India, etc. is buying as much oil that is available regardless of how much the US buys. Bicycles are being outlawed in large Chinese cities because they are slowing the cars down.

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goin_south says on Apr 22, 2008, 06:36:

Oil at $180 a barrel? Gringoloid....we're gonna have to break yer legs! lol

http://articles.moneycentral.msn.com/Investing/JubaksJournal/WhyOilCou...

Ciao! Gustav. Bienvenitos, Ike.

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Robert Jorge says on Apr 29, 2008, 20:05:

Thanks for the article / information esanch. I heard about what you posted, but am too lazy to look for credible references to support the information. If I was playing the market, I would look at selling oil now. In 2 or 3 years, it has got to drop drastically.

Assuming I am indicitave of an average Joe American, I have changed my habits. I keep all lights off except what is totally necessary. I took a job that is a half mile away instead of 25 miles away. I ride my motorcycle when possible. I just don't go out like I used to. My last electric bill, which was yesterday, was $53 dollars. Not bad for a 2000 square foot, 2 story house in Florida. I used to fill up every 3 or 4 days with gas. Now, I fill up once a week or less. I am going on 8 days right now with a full tank of gas left in my car.

--"I believe in making the world safe for our children. But not for our children's children, because I don't think that children should be having sex." - Jack Handy

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