On Sun, Dec 21, 2014 'Chris de Morsella' via Everything List < [email protected]> wrote:
>> The fact that just 5 years ago NOBODY predicted the huge increase in oil >> and gas production that occurred doesn't exactly fill me with confidence >> that those same experts who got it so wrong 5 years ago have got it right >> this time. > > > J> John – Definitely *NOT* the same experts who got their hyper > optimistic assumption predictions so terribly wrong. NOBODY was making hyper optimistic predictions 5 years ago, everybody was running around screaming about "peak oil" and crying that we were all doomed, instead oil and gas production skyrocketed. So I ask you, when a self described expert makes a prediction that turns out to be spectacularly wrong how seriously should we take their next prediction? > if you look at how interest rates for junk bonds for drillers etc. have > recently shot up, the picture becomes clear. Very clear indeed! Of course cost of buying a oil bond has gone down and thus the interest it produces has gone up, it's economics 101. As recently as 2011 oil was going for $130 a barrel, today it's about $60, so obviously the cost of buying a bond that uses oil as collateral is going to go down and its interest rate is going to go up. Today the oil reserves of oil companies is worth less than half what it was worth in 2011, so it's going to cost more for oil companies to borrow money, and borrowing money is what a bond is all about. New technology, in particular fracking, has been very bad news for the oil companies bottom line even if it's good new for the economy as a whole. John K Clark -- You received this message because you are subscribed to the Google Groups "Everything List" group. To unsubscribe from this group and stop receiving emails from it, send an email to [email protected]. To post to this group, send email to [email protected]. Visit this group at http://groups.google.com/group/everything-list. For more options, visit https://groups.google.com/d/optout.
