Replies to post #10481 on Value Microcaps Motherboard

[oilman57]

And alot of smaller oil companies were driven out of business when oil prices dropped significantly. So I would have to disagree with your claim that oil companies can make money at any price. That just isnt the case.

The American Consumer has been spoiled. Oil is nowhere near as expensive as it was in the 1970's, especially after being adjusted for inflation. Oil should actually be much higher and IMHO probably will be.

The largest and easiest oil fields have already been found. And while there is still probably plenty of oil out there, it is definitely in locations which are more difficult to get to. So yes the oil is there but it is becoming increasingly more expensive to find. The low hanging fruit has already been found.

I see a bull run continuing in oil stocks because the average investor has not piled into the sector yet. Ask your neighbors and they couldnt tell you the first thing about oil stocks. This is not like tech in the late 1990's where every Tom, Dick, and Harry knew about tech stocks and hence came the dotcom bubble. In fact if you watch shows like Mad Money, the people who call in are still hung up on tech. Its almost comical to watch. They havent figured out the 1990's are gone. They went out with Bill Clinton and Monica Lewinsky.

[Bobwins]

Argyll, you've got to get out more. Oil price should be $3 a barrel??

Moms shouldn't work, Wally and the Beav should have a great time this year kicking rocks on the way to school. Cmon, get serious. This is not some conspiracy. Do you really think if it was that easy and cheap to produce oil that the Chinese would pay $50/barrel??? NO WAY. They are cheap. They would spend as much as possible at 2.99/barrel to produce their own. I would bet money that they have already tried and come up empty! That is why they are now an importing country vs being an exporting country, like they were a decade ago.

Don't you think the Chinese would control oil prices if they could?? They control prices in many parts of their economy. If oil was so EASY to find that it only COSTS $2/barrel, then why don't more countries just mandate their STATE OWNED enterprises find it and charge $3??

BECAUSE IT'S IMPOSSIBLE TO DO!!!

Check the foreign drillers. They all have Production Sharing Agreements with state owned enterprises charged with increasing national production for their countries. Most of these countries have brought in private enterprise because their state owned companies have declining production and they have ruined their oil resources by overpumping or poor application of current technology.

The oil industry is no different than any other big business. Yes, there are examples of price gouging but overall it is becoming a very difficult business and the chances of success are not increasing. The cost of finding another North Slope have gone thru the roof. Put "Deep Gulf of Mexico drilling costs" into google and check out how much Shell or Exxon is risking every time they start a new Deep Gulf project.

Check out how much a barrel of Coca Cola has gone up in the last 70 years. That would be 42 gallons of Coca Cola. Let's be generous and say you were a smart consumer and bought it in 2 liter bottles. 42 gallons=approx 84 2 liter bottles. Each 2 litter bottle costs 1.50? That's $126/barrel for Coca Cola. What do you think it costs them to make it???

Do they have to drill 15,000ft into the Deep Gulf to try to find it? Do you think the cost of making Coke has gone up or down with mechanization in the last 70 years???

Let's look at Starbucks coffee and talk about price gouging.

Do we need Pop or Coffee to survive on the planet??? NO!

Blaming oil companies for price gouging is ridiculous in my opinion. We are energy pigs. We are using up a finite resource and want "someone else" to find it, keep supplying it at a fixed low cost and be happy with whatever we think is a fair price for it. We are energy junkies!!!

Now that the resource is getting harder to find and maybe, heaven forbid, we may start running out, we want to go back to the "good old days" and not pay for it.

Do you believe for one second that if the price wasn't $50/barrel that the American consumer would change their consumption habits??? NO! They would use ten times as much if oil was $3/barrel, even if you told them they were using the last drops!! Price increases are the only way that Americans will "start" to conserve. It's the only language they understand. We don't get it. So you have to hit them in the face with a price increase. Maybe if Oprah starts talking about it, some will start to conserve. Until then, there isn't much hope. Bobwins

[gilead23]

argyll a couple counter points

First I find it amazingly hypocritical to post to a bunch of people including yourself who are trying to make 50 or 100% annual returns that oil profits are too large.

May I remind you those profits go to their shareholders. What makes you so special that your 100% returns are not obscene but their 20% returns are?

Are you planning on returning your obscene profits or is that only for shareholders of oil companies?

Second oil prices have been stable when accounting for inflation and in fact are pretty in line historically.

Third OPEC may cut production quotas but I would love to hear about some of the companies who simply decide to stop producing to drive prices up. Other than cases where certain wells are not economical at certain prices I have never heard of it.

What I mean by a populist double standard is you find it OK for a consumer to pay as little as possible for oil but theres suddenly a problem when a company gets what the market will bear. Thats a double standard. Consumers are allowed to get the best deal possible companies are not.

As for gouging I basically don't believe anything I would call gouging exists except in exceedingly rare circumstances.

Remember after 911 how gas shot up? We are supposed to be angry at the gas station owners but are they any less greedy than the jerkoffs who rushed to gas stations to fill up their tank even though they didn't need gas?

I see all of your comments as populist nonsense as harsh as that sounds. There is nothing wrong with oil companies selling their product for whatever people will pay. Thats how the market works and it has worked quite well for a couple hundred years.