Friday, September 15, 2006
Those EVIL oil companies.....
From Tom Brown's Bankstocks Website:
There’s a tendency by some to blame the big American oil giants (not to mention Dick Cheney) for the soaring price of oil. Few seem to realize that, as The Economist pointed out (8/12), most of the world’s oil reserves are controlled by state-run companies. Exxon Mobil, for example, ranks only 14th among oil companies ranked by reserves. The 13 companies ahead of it are all national oil companies; together they control as much as 90% of the world’s oil and gas (emphasis added by Mopey). Interestingly, most of the foreign government-owned companies have been badly run. They tend to overstaff, underinvest, and be plagued by political interference and corruption. (Mopey says, sarcastically: Nooooooo, they couldn't possibly be run that poorly! They're owned by the PEOPLE! :)
Production at Venezuela’s national company has fallen since 1998, partly because of inadequate maintenance. The Chavez government has fired most of its experienced and qualified employees, and has indulged in political interference and favoritism. Mexico’s Pemex has made a mess ofMexico’s oilfields since the 1930’s. The general expectation is that the national companies will become even more dominant, as the world’s most prolific fields are virtually closed off to the multinationals. Indonesia has become a net importer of oil, despite its big reserves; Iran pumps less oil now than it did in 1979. Generally, a lack of openness characterizes most NOCs.
The argument goes on as to whether the recent decline in oil prices will last. Ben Dell, analyst at Sanford Bernstein, calls the rise in oil prices a bubble that’s been caused in large part by a stampede into commodities by institutional investors (NYT, 8/20). (Mopey says: Huh? This Ben Dell guy has been saying this for years now--heck he sat right across from me about a year and a half ago and told our portfolio managers to get out of all our oil names because oil was goin' DOWN! What's KMG done since that meeting? Doubled? How about CVX? Up 40%? This guy's a stopped clock.) He compares it to the technology investment bubble of the late 1990s. Prices should weaken, he says, because global storage capacity has about filled up, which should limit the possibility of arbitrage profits. Goldman Sachs estimates that close to $100 billion will be invested in commodities futures contracts this year, versus less than $20 billion three years ago. Others feel that geopolitical concerns and fundamentals have played a larger role than the speculators have, and that oil prices are likely to hold near current levels.
Interesting thoughts!!
There’s a tendency by some to blame the big American oil giants (not to mention Dick Cheney) for the soaring price of oil. Few seem to realize that, as The Economist pointed out (8/12), most of the world’s oil reserves are controlled by state-run companies. Exxon Mobil, for example, ranks only 14th among oil companies ranked by reserves. The 13 companies ahead of it are all national oil companies; together they control as much as 90% of the world’s oil and gas (emphasis added by Mopey). Interestingly, most of the foreign government-owned companies have been badly run. They tend to overstaff, underinvest, and be plagued by political interference and corruption. (Mopey says, sarcastically: Nooooooo, they couldn't possibly be run that poorly! They're owned by the PEOPLE! :)
Production at Venezuela’s national company has fallen since 1998, partly because of inadequate maintenance. The Chavez government has fired most of its experienced and qualified employees, and has indulged in political interference and favoritism. Mexico’s Pemex has made a mess ofMexico’s oilfields since the 1930’s. The general expectation is that the national companies will become even more dominant, as the world’s most prolific fields are virtually closed off to the multinationals. Indonesia has become a net importer of oil, despite its big reserves; Iran pumps less oil now than it did in 1979. Generally, a lack of openness characterizes most NOCs.
The argument goes on as to whether the recent decline in oil prices will last. Ben Dell, analyst at Sanford Bernstein, calls the rise in oil prices a bubble that’s been caused in large part by a stampede into commodities by institutional investors (NYT, 8/20). (Mopey says: Huh? This Ben Dell guy has been saying this for years now--heck he sat right across from me about a year and a half ago and told our portfolio managers to get out of all our oil names because oil was goin' DOWN! What's KMG done since that meeting? Doubled? How about CVX? Up 40%? This guy's a stopped clock.) He compares it to the technology investment bubble of the late 1990s. Prices should weaken, he says, because global storage capacity has about filled up, which should limit the possibility of arbitrage profits. Goldman Sachs estimates that close to $100 billion will be invested in commodities futures contracts this year, versus less than $20 billion three years ago. Others feel that geopolitical concerns and fundamentals have played a larger role than the speculators have, and that oil prices are likely to hold near current levels.
Interesting thoughts!!
# posted by Moopy and Mopey @ 12:21 PM 
