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The oil industry has been on a hot streak this year

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So what did those greedy oil companies do with all of their excessive profits that everyone wanted to pass extra taxes on? "These discoveries, spanning five continents, are the result of hefty investments that began earlier in the decade when oil prices rose ..."

More than 200 discoveries have been reported so far this year in dozens of countries, including northern Iraq’s Kurdish region, Australia, Israel, Iran, Brazil, Norway, Ghana and Russia. They have been made by international giants, like Exxon Mobil, but also by industry minnows, like Tullow Oil.

Just this month, BP said that it found a giant deepwater field that might turn out to be the biggest oil discovery ever in the Gulf of Mexico, while Anadarko announced a large find in an “exciting and highly prospective” region off Sierra Leone.

It is normal for companies to discover billions of barrels of new oil every year, but this year’s pace is unusually brisk. New oil discoveries have totaled about 10 billion barrels in the first half of the year, according to IHS Cambridge Energy Research Associates. If discoveries continue at that pace through year-end, they are likely to reach the highest level since 2000.

The oil industry

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This is very good news. Thank you for finding it and telling us.

Sorry, I've got questions!

How long will it take for these finds to reach the market? 10 years? More?

How much will these finds add to annual (daily?) production? 5%?

Was there any indication of what next year's production will be like, compared to recent years?

I am expecting that the price spike of two years ago will revisit us, and stay. Any thoughts?

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This is very good news. Thank you for finding it and telling us.

Sorry, I've got questions!

How long will it take for these finds to reach the market? 10 years? More?

How much will these finds add to annual (daily?) production? 5%?

Was there any indication of what next year's production will be like, compared to recent years?

I am expecting that the price spike of two years ago will revisit us, and stay. Any thoughts?

The finds affect the market right away. Notice how the oil companies are worried that prices may drop making it difficult to keep up further exploration. "Price" is not a static number based upon what has been produced. It also includes a projection into the future of expected production and costs. The fact that new oil is constantly being discovered is a refutation of those statists who claimed 40 years ago that there was only 30 years of oil reserves left in existence. If we really were running low on oil in the foreseeable future, prices would be skyrocketing as the market attempted to conserve the resource.

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Don't forget to look at oil prices in terms of gold, rather than dollars. It's amazing what you see.

The funniest thing about this is that the Kyoto Protocol was actually a child of Enron (who wanted to boost their emissions trading desk revenues). And that every single of the most vocal of the peak oil crew have vested interests in seeing higher prices (greentech entrepreneurs and investors, T-Boone, oil producers).

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That was a good article. It is hard to find good sources.

One aspect of the oil market that he did not touch on is the demand side. If the Chinese and Indian economies revive, I expect that they will continue to require more energy, increase world demand. Even if those two economies increase their demand only a tiny amount, they are so large that it could be significant. Indian and Chinese demand was a big contributor to the oil price spike a couple years ago. Is there increased production to meet demand? Increased refining capacity? Thoughts?

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I don't think EMs will grow as fast as people make them out to. And I think the oil industry is more than capable to rise to meet demand (just as the car industry was just fine with providing vehicles to Indians). Imagine saying in 1970 "I think car prices are going to go up in the next 30 years because the Indians and Chinese are going to put stress on existing car manufacturing capacity." (well, they did, but because of regulations, not a supply/demand imbalance). If spikes there are, they'll be temporary.

The point Lynch was making above (aside from "there's much more oil than the hippies/manipulators say") was that oil is a good also subject to the laws of the marketplace.

As for temporary spikes... they are usually due to idiots entering an unregulated market where insider information is legal and a large amount of the traders are also suppliers, and hoping to make money - same as any bubble, except it's over much faster -_- (unfortunately, not fast enough to stop the usual uninformed press opinions about a "new era" and how green economics would be the next century's rule)

Livermore (arguably the second greatest trader of all times, after Homma) used to say that if somebody knew good information, he would never speak it out loud, but would make money off it. Accordingly, the only people speaking were those who knew nothing and those attempting to manipulate the market. I think this is most obvious in commodities!

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