Reiterating Thougts on Price of Oil -- WTI (NYMEX) Oil

I maintain that a "fair  price" for Bakken oil is in the $60 - $80 range.

Prices between $80 and $100 reflect world events (e.g., Mideast tension, global economy, supply and demand, etc.).

Prices between $100 and $120 reflect strength of the dollar.

I have posted that almost verbatim three times in past week or so.

This copied exactly as it shows up from Yahoo!InPlay supports the thesis:

11:47AM Dollar Index slipping back off day session high, seeing some limited recovery in Energy/Commodity -- XLE, OIH, KOL, USO, XLB, MOO, SLV, GLD (UUP) :
11:44AM Precious metals are putting in their own rally along with crude; gold is back above $1510, now at $1510.50 +7.10, while silver is now at $45.35 +0.30 after climbing ~0.8% in the last 15 min (COMDX) :
11:41AM Crude oil is rallying and just broke through the $113/barrel level; now at $113.05 +0.85 (COMDX) 

Remember that earlier this morning (before 11:41 a.m.) oil was pulling back, below $112 and heading toward $110 when oil inventory in US was shown to have increased (although that was balanced by inventory of gasoline falling).

Now, after 11:47, with strength of dollar slipping again, oil is back up to $113.

Update, further supporting my my theory:

1:59PM Crude oil just rallied to new session highs at $113.40/barrel without a notable move in the dollar index. However, the dollar is still weaker against the euro; crude is now at $113.25 +1.04 (COMDX) :  1:57PM Dollar Index slide to new day session low, hovering just above its overnight/multi-low at 73.49 (UUP) : Seeing relative strength in Silver SLV, Gold Miners GDX, Gold GLD, Materials XLB, Energy XLE, Oil Service OIH, Copper JJC, Ag/Chem MOO, Commodity Index in recent trade.

1:55PM Precious metals extend gains and make new session highs; gold is now +$6.30 at $1523.30/oz, while silver is +$1.07 at $47.02/oz. (COMDX)

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

Oil Companies' Profit on Gasoline: 4%. Government Profit on Gasoline: 15%

I was sent the following.

When oil profits are reported this week, it should be noted that oil companies make a profit of four (4) percent on each gallon of gasoline. Four percent.

The government makes a profit of fifteen (15) percent on the same gallon of gas.

I'm sure everyone has different numbers, but the point is well taken.

The whole thing reminds me of The Little Red Hen, an old folk tale, most likely of Russian origin. Irony of ironies.

UPDATES

April 28, 2011, 11:34 a.m.: Right now on CNBC: XOM profit per barrel rose only 14 percent. CNBC reports it, but I doubt most "get it."

April 27, 2011: This is from Carpe Diem. First, a map of the US showing the taxes on a gallon of gasoline by state: it pretty much averages 50 cents/gallon.

So, how much money does XOM make per gallon of gasoline?

According to this post on Exxon Mobil's Perspective Blog, "For ever gallon of gasoline, diesel or finished products we manufactured and sold in the United States in the last three months of 2010, we earned a little more than 2 cents per gallon. That's not a typo. Two cents."

Hess Net Income Up 73 Percent, 1Q11 -- Bakken, North Dakota, USA

Link here and also at earnings central.

Confidential List: Some Folks Still Have Questions -- Bakken, North Dakota, USA

I see on other boards some folks still have questions have about the confidential list on the NDIC board.

Someone noted that not all wells have dates associated with them for coming off the confidential list. These wells may be "tight holes" at this point, have not yet spudded, and the clock has not started ticking yet. If they are on the confidential list, and don't yet have a date of release, I assume they are "tight holes" and have not yet spudded. 

For other posts regarding the confidential list, note that "ConfidentialList" is a label at the bottom of the blog.

An update, from the FAQ section of this blog:

14. What information is available for a well on the confidential list, what is the definition of a completed well, and how long can a well remain on the confidential list?

The following was taken from the Bakken Shale Discussion Group thread. From the NDIC: "All information furnished to the director on new permits, except the operator name, well name, location, spacing or drilling unit description, spud date, rig contractor, and any production runs, shall be kept confidential for not more than six months if requested by the operator in writing. The six-month period shall commence on the date the well is completed or the date the written request is received, whichever is earlier. If the written request accompanies the application for permit to drill or is filed after permitting but prior to spudding, the six-month period shall commence on the date the well is spudded."

The obvious question is "when is a well considered to be completed?" For wells that will be fracked, the well is considered "completed," when the well has been fracked. This has been the opined explanation for many EOG wells coming off the confidential list in January and February, 2010. EOG typically doesn't put a well on the confidential list until it has been completed.

If a well has not been fracked at the time the well comes off the six-month confidential period, the status remains listed as "DRL." It will remain on "DRL" status until 30 days after it is fracked. Once the well is fracked, the producer has 30 days to test the well and file the report with NDIC.