Professor Mark J. Perry's Blog for Economics and Finance
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
3 Comments:
1. "The North Dakota oil boom is spreading into Montana, bringing development opportunities for businesses stretching across both states, said Tom Rolfstad, executive director of economic development in Williston, N.D."
Let us look at the facts as quoted in the piece. We read, The play east of the North Dakota/Montana state line now produces 440,000 barrels of oil per day from 5,000 wells. North Dakota officials predict a peak of 700,000 barrels a day. How the hell is production of 88 bpd considered a good thing when wells cost $5-$9 million to drill and have a huge depletion rate?
Essentially, what is being celebrated is the benefits that accrue to some people that participate in a process that destroys capital. Those benefits are only real for those that do not believe the hype and know that the boom is only temporary. Those that buy into the hype and take risks assuming that it is real are likely to get burned just as they have many times before.
Let us move on.
2. "South Dakota auctioned off some 67,000 acresof public land in Harding and Butte counties earlier this month — one of the largest oil based public land sales in the state's recent history. One hundred and eighty six of the 189 lots were scooped up by Bedrock Oil and Gas of Boerne, Texas. Could this mean the state is on the edge of a North Dakota-like oil boom?
Who is Bedrock Oil and Gas of Boerne, Texas? I find little in the way of financial data showing a record of success. Could this just be another shell company which has acquired a little bit of land for the purpose of raising money in a market saturated by hype? This is typical in the mining sector where promoters are good at separating speculators from their money by playing the game of promises over and over again.
At this point the most responsible answer is "maybe." Bedrock Oil and Gas have chosen to keep their intentions to themselves at this point. But they certainly didn't buy all that land for a hunting ranch."
The author needs to do some research on how promotion works.
I thought the author WAS the promoter...
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