OT: Re: katrina ...

[Alan Jackson]

At the risk of beng flamed. I have worked for one of the thieving oil
companies for 26 years now, the second largest, as an explorationist.

Let me share some hard facts.

The world is running out of oil. Exploration discovery rates peaked back 
in the 1960's and have fallen ever since.

Production is estimated to peak sometime between now and 2010. 

We laid off around 70% of our staff in the 1990's when oil was 10-16
dollars/barrel, because that is about the limit where oil companies 
cannot make money. We mostly quit exploring, like all other companies,
and went into survival mode. Now, with oil prices way up, we can't
find the staff to work on all the projects available that could
bring more oil online.

About 18 months ago China passed Japan as the number 2 oil importer. I
immediately moved my retirement into the Fidelity Energy Fund, expecting to
make a killing. Our government on the other hand, didn't seem to notice. I
have, BTW, made a killing - about a 40% increase.

Domestic demand for gasoline continues to increase at 3% per year, my son's
school parking lot looks like an SUV and Hummer dealership. I'm looking at
buying a hybrid myself. We begged our local politicians to invest in rail,
instead they are turning I-10 into a 16 lane monster.

Currently most exploration of significance is in deepwater Gulf of Mexico,
West Africa, and Borneo. We just drilled a dry hole in 8500 feet of water
in the Gulf that cost $50 million. In 5-10 years, the prospective deepwater 
basins will be played out. We'll have gone all the way to the abyssal
plain and basement. The only significant area left after that is the Arctic.
A well there can be $50-250 million, and a development can easily cost 
$10-20 billion. To play the Arctic requires oil to stay above $30/barrel.

There are basically two ways to distibute goods to people. Either you have
a free market, and he who is willing and able to pay the most gets some
of whatever it is, or you have the government take control and ration 
whatever it may be. I'm no huge fan of laissez-faire economics. I think
that the market can be stupid and cruel, and needs regulating. On the 
other hand, it is terribly efficient at matching supply and demand, much
more so than any government could be. I have advocated a carbon tax for 
years - something like 50 cents/gallon on gasoline equivalent, to try to
prepare people for the inevitable shortages and smooth out the disruptions.
Markets rarely drive intelligent long-term behavior. They are usually very
short-sighted. It may be too late now.

And I won't even go into the geopolitical nastiness, except to note that on a
list of who has the most reserves, Exxon is the first non-national oil company
on the list, at around number 15. A large fraction of production, and a small
fraction of reserves, is owned by the oil companies.

-- 
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| Alan K. Jackson            | To see a World in a Grain of Sand      |
| alan at ajackson.org          | And a Heaven in a Wild Flower,         |
| www.ajackson.org           | Hold Infinity in the palm of your hand |
| Houston, Texas             | And Eternity in an hour. - Blake       |
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