Marsden - 4/18/2006 7:11 PM
My apologies then. So do you know why they don't charge more? [:I]
And while I'm at it, is it too late to buy petroleum stocks? Given that November 2000 was clearly the best time...
Man, I don't know how major oil companies decide strategy. I don't own any oil stock (unless it's in my 401K. I do have pieces of several wells that I bought into when I was in my 20's and worked in the exploration industry. Stll paying after over 30 years. I wish to goodness I had done more of that rather than smoking weed and whoring around.
But I'll speculate, why not?
I'd guess they're scared to raise prices too much as at some price point folks will nationalize them. And driving folks into an economic depression with prices is not a long-term profit strategy. Also, I don't know what their profit margin is compared to the inflation adjusted oil price. That would be interesting, too.
There's a lot of oil industry where I live and the independents are creaming themselves doing seismic reshoots on old plays and shooting areas far deeper than was profitable to drill. there literally aren't enough rigs available for contract.
A seismologist I know says that they're hitting about 1:7 wells at a cost of $20M/well. It takes deep pockets to be willing to risk $60M to hit on $140M and the pay-out is far from immeditate. At $20M to drill it would require about a million barrels of local oil break even. But as the price goes up so does the value of small pockets of hydrocarbon.
Also, at some point we're going to reach the price necessary to make Canada's oil shale economically viable. There's a lot of oil shale in Canada.
And let's not forget Siberia.