The Mudcat Café TM
Thread #113173   Message #2407158
Posted By: Q (Frank Staplin)
06-Aug-08 - 08:36 PM
Thread Name: BS: Exxon Mobil Corp. Record profits
Subject: RE: BS: Exxon Mobil Corp. Record profits
Soros-Rogers assets are closer to $20 billion than $200 billion.
In 1998 they hit $22 billion approx., then dropped a few billion. [Now they seem to be up again] (NY Times).
Assets

In June 2008, Soros testified before the U. S. Congress on the reasons for the oil 'bubble. His four factors:

1. "Increasing cost of discovering and developing new reserves, and the accelerating depletion of existing oil fields as they age."
2. "Backwards-sloping supply curve." "As the price of oil rises, oil-producing countries have less incentive to convert their oil reserves underground, which are expected to appreciate in value, into dollar reserves above ground, which are losing their value."
3. "the countries with the fastest growing demand, notably the major oil producers, China and other Asian exporters, keep domestic energy prices artificially low by providing subsidies, therefore rising prices don't reduce demand as they would under normal conditions."
4. "both trend-following speculation and institutional commodity-index-buying reinforce the output pressure on prices. Commodities have become an asset class for institutional investors and they are increasing allocations to that asset class by following an index-buying strategy. Recently, spot prices have risen far above the marginal cost of production and far out forward contracts have risen much faster than stock spot prices."

What Soros outlined in his talk is that "Real-world circumstances have created a mismatch between supply and demand, which sets the stage for a speculative frenzy."
From an article by Andrew Leonard, "How the World Works," June 3, 2008: Soros testimony