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Aug 16, 2006

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RonMck

With regard to oil, part of the problem is that most of the world oil is controlled by National Oil Companies. Politicians have a very short term focus, so in this case the price of oil might be biased downward.

Michael Kruse

Thanks for that observation Ron. I could see national companies skewing prices in other direction based on any number of factors. However, the knowledge of worldwide deposits, prodution capacities and reserves are well known. So I think prices in a large free market economy like the US probably factor all of this in.

No question fuel is more than it used to be a short time ago but it is still a little below all time highs on an inflation adjusted basis. If we wanted to go after more desposits and especially build more refineries, then I think fuel cost would come way done.

Still, overall, the price suggests that there are many more decades of fossil fuel available even with growing demand. I just hope we can find something soon that is more environment friendly.

(As a sidenote, I did my MBA intership at Conrail under a guy who had been a fuel buyer. Talk about a nightmare job!)

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