They Just Don't Get Oil!
When the market is acting crazy and I need to clear my head, I get out and run or power walk. After 4-6 miles, my mind usually becomes much clearer and I can focus on the issue, trade, or whatever. I'm in LA right now, trying to make sense of the oil market. I have done two 10 mile jaunts on back-to-back days. When I left home last Thursday, crude oil had just dropped $4.75 on word that China had raised fuel prices (by reducing subsidies) to most drivers. Speaking on TV last week, I had suggested that we should lift the drilling moratorium in the Alaska National Wildlife Refuge (ANWR) and the Outer Continental Shelf (OCS) off of the U.S. coast. Noting these potentially huge reserves, the pension funds, hedgies and other speculative interests might bail on a maturing bull run in oil. Selling on top of selling might break the bull market's back and send prices south for now.
A Congressman followed my segment and suggested that drilling wouldn't help for 10 years or more. I know this is absolutely untrue, so I called Transocean ( RIG), the biggest driller in the world. An officer of the company told me that depending on the location of the drilling, oil could be realized in as little as a year. Ultra-deepwater fields might produce in 3-5 years. For the most remote locations, without any prior infrastructure support, that barrel may require a 4-6 year window. I suggested 8 years and he said that he could not envision a situation where it would require more than 6 years to bring a barrel out of the ocean floor.