Re: How high will oil prices go?

From: Fred B. McGalliard (frederick.b.mcgalliard_at_boeing.com)
Date: 10/11/04 

Date: Mon, 11 Oct 2004 20:50:33 GMT

<retrogrouch@comcast.net> wrote in message
news:a8flm0h49359of38a4ecu5vc5r9kb7k558@4ax.com...
...
> The notion that conservation, alternative fuels etc. will do anything
> significant short term is absurd. And your idea that increased
> production is possible ignores the facts that the bottle neck is in
> refining capacity not pumping.

Well, conservation can make a big dent in a few weeks, but it would normally
have a 2-5 year flow, where the consumers have a chance to change their
vehicle mix and such. And the coal to fuel plants are probably 3-5 years in
the building, although a country with a real strong interest might be able
to dash into production sooner than that with enough plant capacity to have
a real impact. I thought the price of oil took into consideration avoiding
making gas expensive enough that American consumers buy economy compacts
instead of SUVs, and the projected future price has to remain low enough to
keep major coal producing countries from putting out the money to become
competitors. Of course we should see the precursors to this. China puts a
high tax on imported oil and starts a coal oil pilot plant with options.
Then suddenly the price drops, and the plans go on hold. I imagined that the
price would drop to prevent the Chinese, and the Americans, from quite
reaching the stage where they negotiate the pilot plant. If you were looking
to sell trillions of dollars of oil to the two largest coal countries on
earth, would you want them to think too much on what a bundle they could
make if they made their own? So you are right about what you said, but I
still expect the price to drop dramatically in a few months. Wouldn't be the
first time I got it wrong.

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