Agree - you borow 100% of a house value these days (well recently) so 20-30% for shares seems ok to me too!
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Agree - you borow 100% of a house value these days (well recently) so 20-30% for shares seems ok to me too!
Also you might like to think how well it would have turned out if you had margin traded PRC when at 90 cents.Even if you had to buy on market you could have easily topped up at 95 at that time.
Come 1 july NZO will be again closing the gap with PRC.As i once said a long time ago i do not know which company will win the race but there will be little in it. PRC has a big handy cape to overcome.That being that 1/3 of itself is owned by the other runner,so it means that for PRC to win 2/3 of itself must beat 1/3 of itself pluss NZO's other assets. A big call that is way come july the SP's will close again,and why converting the OD's is a good idea by whatever method you can. But DYOR
"Total production up to 08 June 2008: 13.5 million barrels."
Previous figure was 13.3 million up to 4th June so she appears to still be producing at a good rate - looks like the upgrade might be significant ...:)
nzo had a good gain today[3c] and if the forward market for the dow delivers a good bounce from friday then nzo should add to their gain tomorrrow.
some positive news re momoho spudding would help as well.
nzo @ nz$1.70 by friday is very possible
M
have not seen much comment about these flow tests - to me they are huge.
nzo can't say anything really until after june 30 view perception could influence the options, but, they must have a big ramping press release drafted, ready to release in early july.
any views?
M
Fortune
Why the oil boom will eventually bust
Friday June 6, 10:21 am ET
By Shawn Tully, editor at large
High-flying tech stocks crashed. The roaring housing market crumbled. And oil, rest assured, will follow the same path down.
Not everyone agrees. In an echo of our most recent market frenzies, some experts pronounce that the "world has changed," and that the demand spikes, supply disruptions, and government bungling we face now will saddle us with a future of $4, $5 or even $10 a gallon gasoline.
But if you stick to basic economics, it's clear that the only question is when - not if - prices will succumb.
The oil bulls are correct in their explanations of why prices have jumped. It's indisputable that worldwide demand has surged, chiefly driven by strong growth in China, India and the Middle East. It's also true that most of the world's reserves are controlled by governments in places like Russia and Venezuela that mismanage production, thus curtailing supply growth.
But rather than forming a permanent new plateau for prices - as the bulls contend - those forces are causing a classically unstable market that's destined for a steep fall.
In a normal oil market, the cost of producing the last, most expensive barrel of oil needed to satisfy worldwide demand sets the price for every barrel the world over. Other auction commodity markets work much the same way.
So even if Saudi Arabia produces at $4 a barrel, if the final, multi-millionth barrel required to heat houses and run cars costs $50, and is produced, for argument's sake, at a flagging field in West Texas, the world price is $50. That's what economists call the equilibrium price: It's where the price that customers are willing to pay meets the production cost, including a cushion, naturally, for profit or "the cost of capital."
But today, the sudden surge in demand and the production bottlenecks have thrown the market radically out of balance.
Almost exactly the same thing happened in the housing market. And both housing and oil supply react to a surge in demand with a long lag. In housing, the lag is caused by restrictive zoning and development laws, especially in coastal markets like California and Florida.
So when the economy roared back in 2002 and 2003, builders couldn't turn out homes fast enough for buyers armed with those cheap mortgages. As a result, prices spiked. They no longer bore any relation to the actual cost of buying and improving land, or constructing and marketing a new house (at some reasonable profit margin). Instead, frenzied buyers were setting the price.
Because builders were reaping huge windfall profits, they rushed to buy and develop land. And sure enough, those new houses were ready just as buyers were retreating to the sidelines because they could no longer afford to buy a home. That vast overhang of unsold homes is what's driving down prices today.
The story is much the same with oil, with a twist. A big swath of the market isn't really paying that $125 a barrel number you hear about seemingly every hour. In China, India and the Middle East, governments are heavily subsidizing oil for their consumers and corporations, leading to rampant over-consumption - and driving up prices even more.
But sooner or later the world won't keep paying those prices: Eventually, the price must fall back to the cost of that last barrel to clear the market.
So what does that barrel cost today? According to Stephen Brown, an economist at the Dallas Federal Reserve, that final barrel costs just $50 to produce. And when the price is $125, the incentive to pour out more oil, like homebuilders' incentive to build more two years ago, is irresistible.
It takes a while to develop new supplies of oil, but the signs of a surge are already in place. Shale oil costing around $70 a barrel is now being produced in the Dakotas. Tar sands are attracting investment in Canada, also at around $70. New technology could soon minimize the pollution caused by producing oil from our super-plentiful supplies of coal.
"History suggests that when there's this much money to be made, new supplies do get developed," says Brown.
That's just the supply side of the equation. Demand should start to decline as well, albeit gradually.
"Historically, the oil market has under-anticipated the amount of conservation brought on by high prices," says Brown. Sales of big cars are collapsing; Americans are cutting down on driving. The airlines are scaling back flights.
We've learned another important lesson from the housing market: The longer prices stay stratospheric, the worse the eventual crash - simply because the higher the prices and bigger the profit margins, the bigger the incentive to over-produce.
It's even possible that, a few years hence, we could see a sustained period of plentiful oil supplies and low prices, meaning $50 or below.
A similar scenario occurred following the price explosion in the 1970s and early 1980s. The price spike caused the world to cut back sharply on oil consumption. By the mid-80s, oil prices had fallen from almost $40 to around $15. They remained extremely low for two decades.
It's impossible to predict how the adjustment this time will take shape, just as it was in housing. There the surge in supply came in places the experts swore there was "no supply," and wouldn't be any. Builders found a way to extend vast tracts of homes into California's Inland Empire and Central Valley, and even build "in-fill" projects near the densely-populated coasts.
An earlier bubble is also instructive. In the early 1980s silver prices jumped from $10 to $50 on the theory that the world was facing a permanent shortage of silver. Suddenly ads appeared asking homeowners to bring their tea sets and jewelry to Holiday Inns for a big price. Silver supplies poured from seemingly nowhere, out of America's cupboards, of all places.
And so it will be with oil. We don't know where the new abundance will come from, from shale, or tar sands or coal or an OPEC desperate to regain market share. We just know that it will appear. With prices like these, it always does.
Some very goods posts of late.
Re: do not borrow money to invest in shares. As a rule of thumb i agree. An exception is, if you borrow you MUST be prepared to lose it all.
Im still very bullish about oil. The worst thing is the volatility. This is causing increasingly nervousness amongst all spectrums in Asia at least. Oil hasnt had a correcytion for a while and the longer it goes without a correction the bigger it will be. Eventually the bottom will fall out of it but the bottom may still be $40 or more.
Margin lending on nzo. personally the risk is too high at the moment. 10% or more swings in thr sp will be nothing and i just think the risk is too great. One thing i dont like to do is to be told i have to sell. I prefer to do it on my own terms.
Inflation will go off the scale over the next 12 to 24 months compared the the last decade or 2.
Time to start thinking ahead more than ever
Below is an extract from a small article in the Dominion this morning (top right corner of front page). This is not available online.
“Tui’s gas flare
Tui oilfield is flaring off enough gas to power Auckland …….AWE said it was trying to find ways to use the unexpectedly big quantities of gas…..in the mean time flaring would continue.”
Yes its available here...on the Taranaki Daily News site
http://www.stuff.co.nz/dailynews/4578214a6002.html
also had this quote.....
"To date Tui had produced 13.5 million barrels of oil in 315 days "without missing a beat"."