Thursday, November 23, 2006

new gold dream

Rising Costs Crimp New Energy Projects
HOUSTON (Dow Jones) -- Even as their coffers swell with cash, oil companies are warning that rising costs could crimp spending on major projects needed to meet the world's ever-growing demand for energy.

Labor and manufacturing costs have escalated so sharply this past year that projects' price tags are nearly doubling from when they were announced. Where the industry once thought it could complete a project at $10,000 per barrel of oil, actual costs are closer to $18,000 to $20,000, said Doug Terreson, managing director at Morgan Stanley, at a conference in Houston last week.

A shallow lie of the oily set is that higher energy prices open up a world of possibilities. Complicated projects which don’t pencil out at 30 dollars a barrel are supposedly feasible at 80 dollars a barrel.

I’ve got your undulating plateau right here.

The first thing one learns when investigating energy in an industrial economy is that money drives nothing. Potable energy is the go-juice. The day oil hits 150 dollars a barrel is the day thousands of retard projects all across the globe will be shuttered forever. For want of energy!

That hour has not yet struck. But meanwhile, here in our mundane day to day, when the price of energy doubles, there is a lag,

- and then the price of everything doubles.

A gallon of milk, a deep sea oil rig, all the same. Pay attention.


At 3:26 AM, November 25, 2006, Blogger Big Gav said...

I like the rant MG but its a little disingenuous to say that double oil prices -> double everything pirces.

Oil is an input to almost everything, but its not the only input...

At 1:03 AM, November 26, 2006, Blogger monkeygrinder said...

nobody is off the hook until the world is running on other inputs.


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