Producers` antidumping suit
The antidumping suit filed by some U.S. oil producers against Mexico, Venezuela, Saudi Arabia, and Iraq, is "deja vu all over again": the so-called "Arab oil embargo" against us in 1973. It was foreseeable-and predicted by one of us-that the embargoing countries would divert shipments from the U.S.A. to other countries. Non-embargoing producers would divert shipments from those others to the U.S.A. That is what happened. The net result of any "antidumping" penalties would be the same as the "embargo"-a disruptive customer swap, annoying everyone equally. Because the world market is one big pool, no other result is possible.

Unfortunately, many U.S. oil producers have believed estimates that exaggerate the scarcity and cost of oil production. In each of the countries named, costs are so low as to make the suit nonsensical.

M.A. Adelman
Michael C. Lynch
Massachusetts Institute of Technology
Cambridge, Mass.

ANWR errors
A sharp-eyed reader (a geologist) called our attention to some errors in the numbers in the Arctic National Wildlife Refuge article (OGJ, July 5, 1999, p. 71):

  1. The "Total" line for most columns in Table 1 is not the sum of the column of numbers by land category and is not correct. The correct totals are: 1,772,464 acres, 2,769 sq miles, 3,705,000 bbl of recoverable oil per sq mile, 12.0 mean number of large fields, 559 million bbl of oil per large field, and 2,423,000 bbl/sq mile in large fields.
  2. Some of the numbers in the text in the last paragraph, middle column, p. 74, do not match the table and are not correct. The correct numbers-and text-are: ...one large accumulation for every 98 sq miles in the undeformed sector; 2.6 large accumulations, not million bbl, in the deformed sector; and one for every 761 sq miles in the deformed sector.

Sharman Haley
University of Alaska

No battle in Libya
I read the column about Mr. Stoeckinger`s comments about Libya with special interest (OGJ, July 5, 1999, p. 19).

I returned after a 3-year stay in Libya to London earlier this year. I did about five field trips in the mentioned area and camped quite some nights in the transition zone between the black Messak plateau and the Murzuk dunes. Besides my geological work, I also have a keen interest in archaeology-as long as stones are involved; yes, there are a lot of places where almost every stone that lies around has a Neolithic "touch" to it. A technical term for it is "Neolithic gravel lag deposit." But there was no battle!

During the Neolithic, more humid times, the transition zone was an area where the rivers would come out of the plateau, unite, and form shallow lakes between the plateau and dunes (then green hills, the core of dunes older than the last ice age!). It`s an excellent place for water, hunting, fishing, food gathering, etc. Neolithic people used to live on the edge of lakes and use the same campsites for hundreds of years, which gave them plenty of time to work and lose a lot of stone tools in the mud and vegetation. These accumulated over time in the soil; after the climate turned to desert, the soil dried out and got blown away, and now we see the "residual tool population" of maybe 2,000-3,000 years once dispersed in several meters of soil concentrated on one surface layer (often tools from different style periods together). If you want to find tools, arrowheads, etc., you have to look out for "paleo-surfaces" that have been just "windswept" and nothing else. Much more interesting than the tools are the rock carvings in the area (see National Geographic, May 1999), which might number up to 10,000 in the area.

Bernhard KrainerOMV AG

Oil industry rebounding
United States oil output at 5.75 million b/d in 1999 is at the lowest level in 50 years. And oil and gas producers` increased cash flows from rising prices will likely be used to shore up balance sheets before being employed to drill new wells. While oil supply futures wobble, oil companies are looking the other way. They are concerned with net incomes and returns, not growing production. World markets will be dominated by a smaller number of large companies. In the last decade, the world`s largest private sector oil companies have failed to grow their oil production as well as their net income. Consequently, their share of the world`s oil production slipped away. Simultaneously, oil field decline has been catching up with new field start-ups, thus eroding net growth of new production.

The oil companies are seeking their growth from mergers and acquisitions rather than from expanding their core business, the production of oil and gas. In short, out of necessity, oil companies are sacrificing production growth for short-term financial performance. Therefore, there is likely to be less new activity from the newly merged companies than from the same players when they were separate entities. The longer that continues, the greater will be the rebound in global drilling, onshore and offshore, because there will be a bigger gap to fill in new production capacity.

The next major turnaround is beginning now. It`s clear the bear market in the oil industry is ending. The production restraint by OPEC and declines in non-OPEC supply-which has resulted from reduced levels of capital investments-should restore equilibrium to the oil market. And continued reductions in natural gas storage levels should help support commodity prices and encourage E&P companies to increase their capital budgets. Higher oil prices are encouraging a return back to the shelf market. Severe U.S. production capacity losses from the recent low prices, plus higher costs of developing new capacities in the exporting countries, could accelerate an oil price spiral. Exporters need at least $20/bbl oil before they can expand capacity. We have now reached that milestone.

Dailey J. Berard
New Iberia, La.

Alaska`s sales tax?
H.M. Herndon states, "You would be incorrect about Alaska not having a sales taxellipse"(OGJ, July 19, 1999, p. 6).

The city of Juneau imposes a city-wide sales tax, as do Wasilla and Palmer, according to Mr. Herndon. The city of Anchorage does not.

Because the city of Anchorage is within the state of Alaska, I conclude that the state of Alaska does not impose a state-wide sales tax. Therefore, Mr. Herndon`s opening statement is incorrect.

A state of Alaska website, www.revenue.state.ak.us/iea, states clearly, "The state of Alaska does not have an individual income or a state sales tax...."

Leonard Fabes

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