AUSTRAILIA: OIL PRICES WILL GO DOWN

Australian expects oil price to decline

I agree with Australian Treasurer, Peter Costello that oil pirces will decline. The place where we disagree is in how low they will go once the supplies are increased. He says we will never see oil at $20 or $30 a barrel again. I say oil from tar sands is profitable at $30 per barrel and there are tons of it available.

David Lynch talks about oil production peaks in the following articleNaturally, we are not going to go directly back to $30. It will take time for the new supplies to be developed. Also, China, which has reduced its usage of oil in the past twelve months, will increase its use over the next many years on average. India will also increase its usage but India has planned a new refinery that will cost half a billion dollars.

Of course the construction of refineries do not argue for reduced prices but the construction of sour crude refineries shows that $30 oil is a reasonable target. Saudi Arabia is footing a big chunk of the bill to build and to expand sour crude refineries. This oil can be refined for less than the cost of tar pit oil.

The results of the vote in Iraq will be known next week. There is a good posibility that an Iraqi refinery will be built soon!

Seeing families going to the polls in Iraq was a moving experience. It is no easy task forming a democracy. The Iraqi people want and deserve the right to run their country. The constitution calls for the sharing of the oil wealth. With a constitution in place, the wind may largely go out of the insurgents sails. God Bless America and God Bless Free Enterprise!