Posted by AuntieMel on August 16, 2006, at 13:22:17
In reply to Re: only in the oil business, posted by Jost on August 16, 2006, at 12:21:48
Unfortunately, R&D, exploration and drilling costs are considered capital expenses. They don't come off the bottom line, they get amortized.
But they need to be spent. And they are - by the billions. What I do is considered R&D.
We're finding petroleum products (oil and gas) where it wasn't possible to look just 10 years ago. But deep-water rigs and floating platforms are very, very expensive.
I'm not sure I sould call that short sighted.
The price of oil is not as up-and-down as the news says. Most is sold on long term contracts. What they are quoting in the news is oil futures, which are traded on the commodities market like pork bellies.
As for California? I agree there was no excuse for manipulating the market, and heads did roll for it. Poor Arthur Anderson (the accounting firm) was found not guilty of any wrongdoing - but they are out of business anyway.
On the other hand, they had a lot to do with putting themselves in that postion. When energy was deregulated, they made it illegal to have long term contracts. Gas was cheap at the time, so they made it a requirement to buy on the spot market. Talk about shortsighted!
For the most part, though, there isn't anything like that going on. Geez - they get investigated by congress every election year.
If people had really been interested in stable prices, instead of demanding low prices, they should put a floor on the price of oil. If that had happened in the 80s hundreds (thousands?) of wells that weren't profitible at $8.00bbl would't have been closed in.
poster:AuntieMel
thread:675260
URL: http://www.dr-bob.org/babble/poli/20060809/msgs/677111.html