Plastic2Oil Inc (PTOI)

[the big guy]

Mike: Based on my knowledge, you would have to provide much more information to prove your basic point about the profitability of the oil from the P2O process. But, I think there is some common sense to be applied here. First of all, the $10/barrel is the cost to produce something using the P2O process. That must be refined or processed further to get WTI. That much is obvious. What is the cost of that processing?

I have done cost control in companies. The cost of a product is dependent on the costs of the Raw Materials going into it. Those prices change with time, in time with the business cycle, but gradually. A "spot" price is by definition market-driven, driven by Supply and Demand. Those are two different things. Spot prices can fluctuate wildly.

The function of a Cost Control person and Cost Accounting is to define the true costs, and that is what will impact the success of JBII. The spot price is important for forecasting profitability. Oil companies are massive machines with all kinds of cost everywhere and it is impossible to simplify them here. Suffice it to say, that spot price is reflective of the profits the company will take over time that can be applied to all of there various costs. Nothing more... I know for a fact that although that price is a benchmark, it is just one type of transaction that can occur.

Of concern to JBII is the Cost of their product as raw Material vs what else is out there. I know for a fact (having worked in the engineering industry in Canada) that oil extraction in the Oil sands in Canada becomes efficient and economic when the "price" of oil is about $50/barrel. i also know (from an interview in Calgary some years ago) and was told directly by a hiring manager that oil can be extracted from the Oil Sands for about $18/barrel. That is the cost for the crude product that goes to the refinery.

So the $50 would be based on the Cost (anywhere from $10-$25) for the raw product, plus the cost of any refining, plus an acceptable Profit Margin.

Extraction from the Oil Sands is one of the most costly methods of extracting oil, btw.

What is relevant here is the Cost of the Oil from any source. So at $10/barrel oil from the P2O process does seem attractive, but it is important to be realistic.

You are implying a huge profit margin that is not there. Your figures cannot be right. I would guess that if produced in quantity, oil from the P2O process may have a $8-$10 price advantage based on what I know. ($18 - $10?)