Wednesday, April 27, 2011

SeekingAlpha: Oil on Track to Hit $200 By End of 2012

Link here.

The author has a long discussion supporting his $200/bbl thesis.

One of his points: policies by governments around the world suggest the trend will continue, and provides three examples:
  • UK recently increased its punitive tax on oil producers to 32% from 20%. This is in addition to the "normal income tax," thereby making it punitive
  • New oil production from Canada and North Dakota is bottled up by refusal of the US government to permit a trans-national pipeline improving oil supply to rest of the US
  • The permitorium in the Gulf continues 
The author failed to add another:
  • The EPA has shut down drilling in Alaska

5 comments:

  1. Bruce,
    Is $200. Oil good for North Dakota....(the Bakken?)
    Nick Anderson
    Key West, Florida
    33040

    ReplyDelete
  2. No, no, no.

    I've said over and over that I would prefer a hit to my portfolio if oil were to pull back to $90 rather than trend higher.

    The high price (>$90) of oil is not good for anyone in the long run.

    I think a stable operating environment (which includes government policy, taxes, etc) would mean a lot more to the oil industry than boom-and-bust cycle they usually face.

    Right now, the oil industry can't make plans without huge government interference (best example: EPA shutting down Shell in Alaska).

    I still feel (in April, 2011), a "fair" price for Bakken oil is in the $60-$80 range. Between $80-$100, it is a function of world events (mideast tensions, global economy), while above $100, it is a function of risks of inflation (trading alongside gold, silver).

    ReplyDelete
  3. Bruce,
    Thank You for your coments.
    Nick Anderson
    Key West, Fl
    33040

    ReplyDelete
  4. Agreed...

    However, if oil really does go to $200 a barrel North Dakota's oil companies will be making a killing... At the expense of destabilizing the rest of the world.

    ReplyDelete
  5. It is beyond my comprehension what $200 oil would mean.

    ReplyDelete

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