Re: Oil Futures (fwd)

From
Date

Norm: You've raised some good practical points. Firstly oil will not run
out by 2007; i do not think even during the big crises of the '80's did
any one predict such an early date. 

Secondly, an Opec-induced shortage as before is unlikely for at least a 
number of years. At present, there are too many alternate sources for 
OPEC to do anything, unless Saudi Arabia wants to drop the price to 
$10/barrel, which is unlikely. In addition, OPEC has learned that lowered 
market price for increased share does not erase budget deficits.

Thirdly, the effect on paleo in genral and micropaleo in particular has 
already been felt and present trends will continue. Managers continually 
look for ways to reduce people cost with 'sure-fire' technology. The fact 
that it doesn't always work seems to be irrelevant. Micropaleo still 
depends on people who know what they are doing and this costs money. 
Witness the fact that when oil industry came up with the idea of a 
coordinator, they kept lesser experienced (ie, cheaper) people rather 
than a more experienced person.

Experience used to be of value in the business. It no longer is as there 
is this strange concept that all people coming out of college are 
fundamentally better trained than people with 15 years experience.

As an anology: suppose your HMO decided to cut costs by getting rid of 
experienced (more expensive) doctors and replacing them with people who 
are just completing internship, based on the premise that these people 
know the new techniques better than those who have been working for 15-20 
years. Sound ludricous? This philosophy has been a working premise in the 
oil biz for a number of years.

On the positive side, one major company in the U.S. has returned to the 
old fashioned idea of sending a paleontologist out on critical wells 
because, of all things, the production department insists on it. Perhaps 
there still is a bastion of sanity left in some companies.

Incidentally, I accidentally sent this the first time to your address and 
it came back user unknown!

Norman C. Rosen, Houston, TX