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 EPA has shut down drilling in Alaska
Bruce,
ReplyDeleteIs $200. Oil good for North Dakota....(the Bakken?)
Nick Anderson
Key West, Florida
33040
No, no, no.
ReplyDeleteI'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).
Bruce,
ReplyDeleteThank You for your coments.
Nick Anderson
Key West, Fl
33040
Agreed...
ReplyDeleteHowever, 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.
It is beyond my comprehension what $200 oil would mean.
ReplyDelete