Professor Elam

Robert Samuelson ponders the impact of $100 oil.  He outlines how the past policy of energy availablity is in disarray. 

While the press loves to excoriate oil companies during high price for high profits, actually this makes negotiating for leases and drilling rights very difficult. Why?  Okay, remember that as recently as 1998, oil was $12 a barrel.  Now it is eight times that.  If you are going to run a DCF discounted cash flow model for acuiring an oil lease, what price of oil will you use?  Fifty dollars, eighty dollars, who knows?  That makes buying and selling leases nigh impossible because buyer and seller cannot come to an agreement on price. And this makes negotiating for off shore deep water leases which may be new sources of oil, very difficult as costs soar on leasing offshore rigs.  Take a look at the Transocean site.