[capeman]

Yes but when MOST get involved in an investment vehicle I get the hell out. 30% is conservative from my perspective as a lifetime San Diegan.

[capeman]

Here’s an interesting link on that…

http://money.cnn.com/magazines/business2/business2_archive/2005/12/01/8364596/index.htm

Here is the summary (below), although there is also a bit on there about oil sand mining and it’s cost being ~$25 a barrel. $30 a barrel from shale extraction is still reasonably profitable at this point but will become more so as current supplies are heavily controlled (by coalition forces and anti and pro-western countries.) As our needs increase due to all of the SUVs now out there and Eastern countries industrialize to maximal potential (using loads of oil in the process), you will likely see controlled prices rise even more due to limited daily production. At that point $30 a barrel cost is negligible and the rest of the world is subject to our production of the badly needed surplus. That would be a very good way to reverse a problematic and nagging trade deficit with a large eastern industrializing country.

If heating is the major energy contribution involved in the process, nuclear means could handle the supply of energy needed very easily and could be subsidized by the govt. Just a theory but a politically reasonable one seeing that everyone in the world (mostly us!) is currently positioning for control of the world oil supply and we carry the possible trump card for the needed extra supply.

OIL SHALE

Legendary American geophysicist M. King Hubbert famously predicted in 1956 that U.S. oil production would peak in the early 1970s. Though ridiculed at the time, his prediction–today known as “Hubbert’s peak”–came true, and domestic production has declined ever since. In the coming decade, however, American oil production could be on the upswing again. It isn’t likely to be the controversial proposed drilling in the Arctic National Wildlife Refuge that does the trick, though that would boost production. The bigger kick could come from oil hidden in sedimentary rock known as oil shale found in vast quantities throughout western Colorado and parts of Utah and Wyoming. Government scientists have estimated that the United States is sitting on 2.6 trillion barrels of reserves in oil shale form, spread across an area of nearly 16,000 square miles of federal and privately owned land. The oil-rich terrain is the single largest untapped petroleum reserve in the world.

Like oil sands, oil shale is witheringly expensive to exploit; such efforts in the late 1970s famously collapsed when oil prices dropped from the highs of the Iran hostage era. The technology for extracting oil from shale has improved drastically since those days; industry leader Shell has come closest to perfecting a commercial process but still remains several years away. Shell’s process involves drilling a series of holes, each as deep as 600 feet, which are then filled with heavy-duty electric heaters that warm the rock to 700 degrees Fahrenheit. The heating process releases a combination of oil and gas that can then be pumped out of the well. “We’re confident that high-quality crude can be produced from shale for roughly $30 per barrel,” says Shell spokeswoman Jill Davis.

Shell, Chevron, and six other firms have recently descended on the western slope of the Rocky Mountains, submitting applications to the Bureau of Land Management, which manages most of the oil shale reserves, to drill test wells. The U.S. Energy Policy Act, passed in August, requires that the agency issue licenses for research and development by February. Prices will have to stay high for oil shale to pay off, but the upside could be enormous.

THE PLAY Extract hydrocarbons trapped in ancient rock

PLAYERS Chevron, Exxon Mobil, Kennecott Exploration, Shell

POTENTIAL PAYOFF 2.6 trillion barrels or more of recoverable reserves

1 BORE IN In a 30- by 20-foot field, a series of 600-foot-deep holes are drilled to reach oil shale–sedimentary rock containing hydrocarbons. The holes are spaced 5 feet apart around the perimeter and within the field.

2 FIRE UP Specialized heating tubes placed in the holes warm the rock to 700 degrees Fahrenheit, a process that can take anywhere from eight months to four years.

3 SPLIT OFF At the molecular level, the heat separates carbon–oil and gas–from the rock.

4 LIFT OUT The oil and gas are then sucked from the ground through holes equipped with pumps at the top.

Sources: Bureau of Land Management; Shell

[capeman]

Why wait for the Alt-A event. It is going to happen and at that point the prices of the puts will shoot through the roof. I bought $40 Jan-08 puts this week since the insider sales sheet is smoking and the stock is just off its all-time high.

[capeman]

Hmmm… I’ll have to check out that film at some point but I’m wondering if they had mentioned the oil shale reserves recoverable in the Green River formation in Colorado. 2.6 trillion barrels worth…

http://en.wikipedia.org/wiki/Oil_shale
http://www.dailyreckoning.com/rpt/OilShale.html

Did they happen to mention the reserves of oil sands recoverable in Alberta Canada (currently larger than the reserves of Saudi Arabia)?

http://www.energy.gov.ab.ca/89.asp
http://www.usatoday.com/money/industries/energy/2004-09-07-oil-sands_x.htm

Combine that info with a heavy amount of research capital easily provided by oil companies and the Govt’s plus a North American free trade agreement and you have the final tipping of power in OPEC and world economics. Not so doom and gloom and since the US Govt. has owned the Oil shale land for 100 years it’s a pretty sure thing they’ve been planning to pull this card at some point.

[capeman]

CFC is following the fools rally this stock market is having. I’ve been watching the stock and its options heavily for a year now and wish I would have bought Jan 09 puts when it was ~$44 a share equity. It’s on it’s way back up momentarily but I think the stuff is really going to hit the fan not when the market retreats but when people start to focus on delinquent Alt-A and then eventually Prime mortgages. That’s when this guy will start heading back to pre-boom <$10 a share. The options just in the money at the time of purchase seem to be a bargain if this is what happens. I will be in by June.

[capeman]

That's pretty funny. Claiming someone's data and their statistical interpretation of the data is wrong because they won't interview people.

I stopped reading Rich's reports, because he uses data to speculate, instead of using facts/interviews to understand.

That makes no sense at all. Real data and real numbers are about as factual as you can get. Interviews and opinions from those in the trench are just that… opinions. I would not trust what RE agents and most economists have to say since they have been the benefactors and in most respects the promoters of the current asset bubble. There has never been a precedent for the current bubble so someone's “expert” opinion on what will happen next is pure SPECULATION.

She should probably get her terminology down since there is a big difference between interpretation and speculation. Rich has been really good at presenting and interpreting data so that we as readers can digest it and decide if it makes sense.

That is the proper way to educate and enlighten people.

[capeman]

Yeah but as a Blue Chip style company QC doesn’t give squat for options anymore and if they did they won’t be seeing the 4000% growth they did in ’98-99. This housing party is over and nothing short of a HUGE war will soften the crash. Sentiment will turn at some point in the next year and then free-fall. The lending spigot has been shut off for this price range so it is just a matter of when everyone realizes their house is only worth 40-70% of what they thought then it will play out.

[capeman]

Just make sure it doesn’t have shake shingles…

[capeman]

Does the sub-prime mess really matter in San Diego? This whole bubble mess is just getting started. What the sub-prime resets don’t do to more desirable areas the Alt-A and ARMs that Prime borrowers took out to ATM their house for toys will start nicking away at the market soon enough.

[capeman]

Yep, I was racing devaluation when I had a dodge truck a few years ago. That was when I gave up my loyalty to American auto companies and bought foreign. Toyota and Honda are the way to go and you can lease or put nothing down and be ahead of the payoff very quickly. It sucks that we have to pay to learn lessons like that. It also sucks that we need credit to buy a neccessity like that. Just think of what cars would cost if credit was not readily available in the economy, or the cost of houses for that matter.

[capeman]

I agree with that. I don’t own a gun and may or may not ever own one. One thing that makes perfect sense to me is that these thugs think they can get away with their diabolical plans due to the fact that most people don’t carry. They know that in schools even fewer people are likely to carry. Now if you allow everyone to carry a gun then it makes their chances of perpetration much less significant.

Think of it hypothetically this way, if someone wants to rob a bank at gunpoint they put their faith in the chance that they are more heavily armed than anyone in the bank. If the robber has any reason to believe that even little granny may be packing then he is much less likely to risk his life for a few bucks. That guy would not likely have attempted what he did had he thought he might only kill one or two before being taken out by someone. He wouldn’t have received the publicity he planned to get all along by going big and killing dozens.

You can take a neighboring country for a somewhat of a comparison to an extreme situation. Although Mexico has never been known to be one of the more crime free states, it outlawed guns and now any drug gang can perpetuate kidnappings, murder (of city officials even), and trafficking as they please. They have all the guns and have corrupt leverage over the police that are the only group that can check them. That is not the greatest comparison in the world but an example of what could come to be if the good people who would only protect themselves and their families are not allowed to.

Even though I don’t carry, I like the idea that I am kept safe from those people who would do me harm by the thought in the back of their heads that I may be the last person they try to wrong.

[capeman]

There is a lot being forgotten when it comes to fundamentals involved in real estate. What it comes down to is that there is one very basic element to predicting how much prices will correct over time. The leading indicator being: What can the people of a given area afford based on average income and the current interest rate on a standardized loan (30 year amort. has been the gold standard)? Since most all other non-standard and risky forms of mortgages are quickly being worked out of the system, it will very soon come back to this basic fundamental level of affordability.

For example, a life-time SD resident such as myself, with a professional degree, earning upwards of 30% over median “family income” (without including my significant other’s income) cannot afford an average home in an average neighborhood via standardized loan with 10-20% down. Until prices come to a point where I can afford a home given these conditions and making no more of a payment than ~30-35% of my income then prices are not fundamentally sound and I can expect further declines. Otherwise I can expect overall incomes to increase by >30%, interest rates to skyrocket to >1980’s highs or the area to turn purely into a luxury haven where only the richest 10% of people can afford a home. Based on these predictions and aside from mortgage rate changes that I cannot predict (likely to go up greatly though!), I expect single family homes in a somewhat desirable neighborhood to drop 30-60%. It is that simple. The only thing one cannot predict are economical pressures or MANIPULATIONS that would alter the timeline for reversion to equilibrium.

[capeman]

Hmmm… all of this happening around the same time UK politicians align with our noble president (yes, I don’t feel it deserves a capital P anymore!) to strike up illegitimate wars for power. If our housing bubble had never happened, then we would have been leading the largest global recession in history at the beginning of bush’s first term. Tough to get illegitimate wars approved when the people are pissed off and worried about how they are going to pay for their accustomed lifestyles. The only difference between the UK situation and the eerily similar one in our economy is that nobody involved in perpetuating it here (i.e. Greenspan) will ever admit to it.

[capeman]

Yep. I spent 18 years growing up in Escondido and I would never do that to my kids. My family has been there for 50+ years and they don’t like where it is headed either. That will be rock bottom bargain RE in the next couple of years as a lot of homes in the better areas are vacant due to them being bought as investment properties for hopeful flippers. The school system is a lot less desirable than other area of the county too.

[capeman]

Hmmm… I’m kind of putout by the idea that party pushers can put a guys face all over magazines and speak at conventions and all of a sudden he is qualified to run the country. I’m confused on what his qualifications are that will enable him to take 300+ million people and their country in the direction it needs to go. Ivy league schools don’t do it for me as it is the same Ivy Leaguers who think they can predict and talk the real estate market back to life while they are leading buyers to their doom. The dude hasn’t even finished one term as a Senator of one of the smallest states in the union. Looking at his resume I’m not seeing it and pundits telling me how it is doesn’t work when he is not backed up by the quals.

Arnold the Governator is way more qualified to be President. Someone amend the Constitution!

[Author]

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