<GCC: House Committee OKs New Refinery LegislationThe Oil DrumTwo short items to note>

88 comments on And it begins...the government says (more deeply this time, and with feeling): 'CONSERVE!'

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TJ on October 3, 2005 - 8:01am Permalink | Subthread | Parent | Comments top
Also, anything that's older than about ten years probably has a book value close to the salvage value.  That means any replacement will be treated by the corporations as a new investment.  There will be a big temptation to just take whatever insurance money and run.
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wkwillis on October 3, 2005 - 1:58pm Permalink | Subthread | Parent | Comments top
Not really. In World War Two the price of used cars zoomed (even with gas rationing) because they stopped building new ones and converted to war production.
The value of the oil rigs is greater than the insurance because the insurance was written when the price of oil was much lower than it is now, and rigs are far more valuable when the oil is more valuable.
The only way the value of the rigs would go down is if the oil companies expected that the price of oil would go down in the future, when the oil would be produced by the oil rigs. IE, that the oil company executives do not believe in peak oil.
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