<Jim Cramer: "The Simmons Argument is Right..." The Oil Drum In today's New York Times>

30 comments on About that savior technology . . .

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TRE on September 9, 2005 - 8:01pm Permalink | Subthread | Comments top
A couple questions/considerations. (1) What is the time period?  (2) If the Saudis had, over that time period, the capacity to flood the market at will, what would have been the good of that R&D? Spend lots of money and have the Saudis push down the price of oil.

Consider this:  Oil & Gas Journal. Mar 8 2004. Maarten Van Mourik and Richard Shepherd. "Investment incentive concerns overlooked in peak-oil debate."   It argues that oil companies had no incentive to invest in R&D until oil prices hit a higher price regime.  That would not happen until the Saudis also had to similarly invest.  Otherwise the Saudis could blow them out of the water at the turn of a spigot.  Once it's clear the new price regime is here, then the higher fruit can be picked, more R&D can be invested with a guaranteed return.

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TRE on September 9, 2005 - 8:05pm Permalink | Subthread | Parent | Comments top
And how has the R&D changed over time?  Say in the 20th century.  And how does that compare with other businesses?
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TRE on September 9, 2005 - 8:09pm Permalink | Subthread | Parent | Comments top
Sorry.  Talking to myself.  Another consideration.  What is the absolute level of R (research) and D (development)?  In other words, what the sales of these different areas?  If I'm not mistaken, oil is one of the biggest businesss in the world.  On the R side, a small percent of sales could still be an enormous amount of money, enough to literally cover just about all necessary bases.  On the D side, I'd expect more (if D includes the building of, for example, offshore rigs, etc).

But in a vacuum, I'm not sure that these numbers can mean much without additional context.

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TRE on September 9, 2005 - 9:52pm Permalink | Subthread | Parent | Comments top
Came across these notes.  Some interesting ideas: The true cost of oil.  A  brief quote:  "But over the past 20 years, oil has been a terrible investment.  A 15% return on investment (ROI) is what one expects to get from a building.  Oil's ROI has largely been less than 15%.  Scotch return 50% ROI, wine returns 15%.   As Simmons quipped, he has spent his career in the wrong kind of barrels."
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30 comments on About that savior technology . . .

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