My latest Street.com column, "A Not-So-Efficient-Market Hypothesis" is up at RM.
It expands upon many of the ideas from earlier comments, Compare and Contrast.
UPDATE: December 2, 2004 5:43am
Interesting article in the New York Times about surprising price patterns and inefficiencies in the Fine Art market:
Economists Have Advice for Buyers as the Art Market Heats Up
"We are living with an energy illusion of the highest order,"
So warns oil banker Matt Simmons, 61, whose "bold and often prescient pronouncements have won him followers — and detractors — in the course of his 30-year career."
According to Simmons, whether the Saudis have overestimated their crude reserves or not is the key question for energy prices the next decade or so.
In an interview with Barron’s, Simmons lays out the Bull case for Oil:
"With global demand for oil on the rise, and prices hovering near $50 a barrel, the Saudis’ production profile is more than academic. The No. 1 oil producer, Saudi Arabia pumps 13% of the world’s oil and boasts 23% of its oil reserves. Moreover, the Saudis alone claim to have excess production capacity and the ability to increase output if demand continues to rise.
Simmons’ conclusions are based largely on his analysis of the high water content and other signs of aging of Saudi oil fields. Not surprisingly, they have caught the attention of Saudi Aramco, the kingdom’s national oil company, which has dismissed his views and remains committed to previously published numbers of the size of Saudi reserves.
Because the Saudi oil industry is state-run, and there is no independent auditor of national reserves, it is impossible to determine just how large — or small — the Saudis’ are.
If the Saudis’ numbers are correct, the kingdom could continue to produce at current levels of about 10 billion barrels a day for the next 50 years, or more. That would give the industrial world time to develop alternative energy sources and prepare for a graceful transition.
If Simmons is right, however, the world could face a dangerous imbalance between rising oil demand and diminishing supply, perhaps within the next 10 years. Oil prices could soar, economies could suffer, and oil-dependent nations, such as the U.S., China and Japan, would be forced to scramble for additional energy sources."
Consistent with my long term view on this sector, Simmons may not be that far off.
Barron’s, NOVEMBER 29, 2004