[BabyPeanut]

$this->bbcode_second_pass_quote('', '[')url=http://www.thedesertsun.com/apps/pbcs.dll/article?AID=/20051030/COLUMNS03/510300311/1238/business]Big Oil has bucks, but can it last? (link)[/url] by Morris R. Beschloss
Special to The Desert Sun, October 30, 2005
With energy multinationals reporting record profits...
...skip... The privately held oil companies are increasingly forced to explore marginal sites, such as joint ventures in India, gas fields in the Bay of Bengal, and exploration in some of the former Soviet Republics.
The skyrocketing expense of buying additional reserves at today's prices will likely punch a hole into the oil giants' huge cash reserves more quickly than they expected.

[Heineken]

The scarcer oil becomes, the higher the price will tend to go. So the diminution of the oil companies' reserves will tend to be offset by their increasing value. This creates a "staying action" that may extend the lives of these companies quite some time, I think. And the mountains of cash they make doesn't have to be invested just in the oil-and-gas business or even in the energy business.

There will always be an instant market for whatever oil outfits like CVX and XOM are able to produce. If we're not using the oil to run our cars, we'll need it to produce our pharmaceuticals and our trash bags.

As a stockholder in some energy companies, I'm counting on it.

But ultimately it all collapses, because it's like a snake feeding on itself.

[lowem]

$100 billion ought to be enough to last quite a while ...

[bobcousins]

Chevron spent altogether about $18 billion acquiring Unocal, so $100 billion doesn't go very far. The oil majors have made it clear that they view ther core business as oil, and that is where they wil stay, despite dabbling in minor alternatives. (To an oil major "alternative" sources seem to mean deep water and oil sands). And they also plan to give the money to shareholders via share buybacks rather than invest it directly.

Sure high oil prices help, but the thrust of the article is that the oil majors are going to burn through their cash windfall pretty quickly. I see nothing to counter that.

[BabyPeanut]

$this->bbcode_second_pass_quote('Heineken', 'T')he scarcer oil becomes, the higher the price will tend to go.

[Heineken]

I don't disagree, baby. All I'm saying is that, when it comes to facing the limited future, oil companies are in a better position than most companies. They'll be in business to the end because what they're selling is valuable (and getting more valuable) and desperately needed. They'll have a market for their "wares" even during a deep depression.