[zlZ95pjt]

Oh Jesus. We need another thread praising KH as if he doesn't praise himself enough

[JohnImamadviser]

Well if he bought USO in 2006, he would actually be poorer now.

[untostaronaf]

On March 24, 2006, five years ago, KrazyHorse and I made a bet as follows...



I took the less than $64 end of the bet, which couldn't have been more wrong. The closing price on March 24, 2011 was $105.60, or 65% greater than the agreed strike price.

I doubt that KH had high confidence in his side of the bet when he made it -- the futures contracts implied roughly a coin flip. However, you pays your money and you takes your chances...

To my mind, the biggest factor that I did not consider was the relentless increase in Chinese demand for oil. The Chinese way of life has changed dramatically in these past five years. In a few of the major cities, most people drive cars to work whereas five years ago most rode bikes. Meanwhile, many more Americans ride their bikes to work than they did five years ago. Who knew.

Despite Chinese demand, I still think that the price of oil is too high. Put simply, at $105.60, even the most marginal of producers make very good money. Also, new technology is being introduced to minimize oil use. These changes are not in the long-term interest of the Saudi Arabias of the world.

Further, drilling methods in conventional fields have become much more sophisticated in the last few years. Nowadays you hear a lot about shale natural gas production finds. But these drilling methods can be applied for oil fields as well throughout the world.

In any event, I was wrong, KH was right. And he is $1 richer.

More important than the current price of oil is the fact that spot has been above the strike for ~80% of the lifetime of the bet, despite a once-in-a-generation recession in the US (and a global dip as well)

[PareKeect]

I think the price of oil will stabilize, more or less, at 120 for years.

What's also fantastic is the price of bitumen is inching closer and closer to the price of West Texas.

[pokerbonuscod]

He was mad.

[dyestymum]

Even I knew developing world demand was going to out strip supply increases causing prices to rise. Dans is to be commended for owning up to his error though.

[NumsAmenniams]

Albertans smell like toe cheese.

That's the money you're smelling.

You're just not familiar with it.

Compare Alberta's debt load with California's for a good belly laugh. :gasmaske:

[Signabeademia]

Even I knew developing world demand was going to out strip supply increases causing prices to rise. Dans is to be commended for owning up to his error though.

Why didn't you buy futures then?

[Muhabsssa]

Funny. I was on the same side as DanS.

Even I knew developing world demand was going to out strip supply increases causing prices to rise. Dans is to be commended for owning up to his error though.

Yeah, you knew, but did you know at the time?

[HornyMolly]

More important than the current price of oil is the fact that spot has been above the strike for ~80% of the lifetime of the bet, despite a once-in-a-generation recession in the US (and a global dip as well)

Can we say that it was a true global dip? It caused a big ripple in the Chinese export sector, but if the growth numbers out of the government are to be believed, the country hardly missed a step.

[LoloLibia]

I think the price of oil will stabilize, more or less, at 120 for years.

I'd be willing to bet that it's not...

[mynaflzak]

Gran Tierra Energy, Inc. (GTE)

One of countless smaller energy companies in Calgary. Why mention them?

AFAIK they don't even really work in Canadian oil. They focus in South America.

[Cd9JfGHR]

I would just like to thank DANS for EXPOSING KH for the liar he is. Remember that infamous quote that he was 100% invested in equities? WHAT ABOUT THIS BET?

5 STAR REPORTING