Axis Energy Corp (AXGC)

[MistaPhat]

The way I see it is this deal is either real, or it's not real. The daily price has nothing to do with it. If oil drops to $20, so be it. Doesn't affect the reality or non-reality of the deal.

But why did oil spike and then crash?

Best explanation is at http://www.321energy.com/editorials/simmons/simmons122408/show122408.html?id=01
Read the whole thing. It's actually quite scary. By now you probably believe peak oil is fake. Think again.

This guy is very sharp. He reminds us of a history lesson of Metallgesellschaft, a German company that lost over $1.4 billion after speculating increase in oil price in oil futures market. A subsequent drop in oil price left the company buying the oil at a higher price than the market price. Oil prices collapsed and then later rebounded higher than ever before.

Now with the financial crisis, and the financial houses in a mess, there may be fewer with enough credit to by oil futures, so demand for “paper oil” has dropped off.

slide 24
• What goes down can come right back!
• Nothing kills low prices faster than low oil prices.
• Current prices will hurt supply growth.
• Big issue is how much and how fast.
• $147 oil prices were cheap
• They were helping many economies to boom again.
• OPEC beginning supply cuts

On slide 38:
• Recent collapse in oil prices is very dangerous.
• Supply has already been affected by:
– Projects delayed
– Decreased number of rigs employed
– Consolidations and lay-offs
– Abandoning ultra-expensive projects
• This exacerbates crisis (unless economy never improves).
• World needs to grasp how cheap $147 oil really