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To: a.handbag. who wrote (8234)	12/3/2004 2:40:53 PM
From: Tommaso	of 11633

>>>Perhaps they are expecting a 20 year bear market for energy, in line with the performance of gold after it hit $800. <<< If the only use for oil was to put it in the SPR, the way gold resides at Fort Knox, they might have a point. I find gold to be the most cumbersome, illiquid, useless form of money that I know about. I have a bunch in a safe deposit box where it has been for years. Compared to things like Paypal, it is truly what Keynes called it. I have also a failed experiment in storing heating oil. To get rid of it will cost me hundreds, perhaps thousands of dollars; it presently resides, no doubt illegally, in a tank buried in my yard. It's too smelly to burn in a kerosene heater inside a house and too contaminated now to use as diesel fuel. I think energy prices will remain cyclical and volatile, but that the terminal shortages and permanent depletion of oil and natural gas are just starting to be felt.

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To: a.handbag. who wrote (8234)	12/3/2004 4:18:14 PM
From: Taikun	of 11633

a.handbag, I personally think 2005 will be difficult for the oil and gas trusts. Gas prices are already trending down after reports show little shortage and although the cold winter has not yet arrived, even if it gets very cold, it will not be a long cold winter. Moreover, we have a glut of oil, and prices may see the mid-30's. It was only two months ago when people were looking for the unhedged trusts (VKR), and now people want the hedged trusts. BNE is the first sign of distribution cuts. This opens the door to more. I sold several of my short RLI trusts (HTE) last week and decided I couldn't handle the folks at AVN who, in my opinion, like to sail close to the wind. Even the oil sands, which I think are a great investment, have yet to really show us how much money it will cost to fully develop them. Yes, peak oil has either arrived or is close, and yes it is a long-term buy. Short-term, we will be in for some volatility as investor realize we've got lots of oil and the oil trusts may be cutting distributions. If I buy some more I might add DAY.UN or some more BNP.UN on weakness. D Bonterra cuts: Bonterra Energy Income Trust Quick Quote: BNE.UN 20.50 (-0.85) Bonterra Energy Income Trust Confirms Cash Distribution Payable December 31, 2004 12/3/04 CALGARY, Dec 03, 2004 (Canada NewsWire via COMTEX) -- Bonterra Energy Income Trust (www.bonterraenergy.com) (T.BNE.UN) is pleased to announce its distribution to Unitholders for the month of November 2004. The record date for the distribution is December 15, 2004, and the ex-distribution date is December 13, 2004. T he distribution will be made on December 31, 2004. The amount of the distribution will be $0.18 per unit. The distribution has been reduced by one cent from the prior month due to reductions in commodity prices and the increased strength of the Canadian dollar. Bonterra Energy Income Trust is a conventional oil and gas royalty trust with operations in Alberta and Saskatchewan. Its units are listed on The Toronto Stock Exchange under the symbol "BNE.UN". %SEDAR: 00017467E VIEW ADDITIONAL COMPANY-SPECIFIC INFORMATION: newswire.ca For further information: please contact: George F. Fink, President, and CEO or Garth E. Schultz, Vice President - Finance, and CFO, Telephone: (403) 262-5307, Fax: (403) 265-7488 News release via Canada NewsWire, Calgary 403-269-7605 Copyright (C) 2004 CNW, All rights reserved

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To: Taikun who wrote (8236)	12/3/2004 4:52:34 PM
From: Seeker of Truth	of 11633

Hello Taikun, A "glut of oil" eh? Why not tell that to our OIL/GAS trust operators? Very few of them are able to raise their daily production per unit. That seems to me to suggest that they can neither find nor buy more oil reserves at the present prices. Well OK, you might say; that's Canada, but outside of Canada and the US many countries are increasing their daily production. The answer to that is which countries. The finding of 27% water in Saudi oil wells is a striking fact. As for Russia, internal demand is rising and I haven't seen any year on year increases of their exports. The North Sea is certainly depleting by everyone's measures. So where are large quantities of new oil? A fluctuation doesn't make a glut. I feel confident that time is on the side of the LTBH folks. Whether it's five hours from now or five years from now but much higher oil prices will surely come. As we always hear, oil is not that much more expensive in terms of everything else than it was 20 years ago. In other words, oil has just begun to rise. Most of the people who sell you advice about how oil is certain to go way up in 2005 or oil prices will surely collapse in 2005 are charlatans, the rest of such people are morons. Noise is ever present. JMHO

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To: Seeker of Truth who wrote (8237)	12/3/2004 5:26:04 PM
From: Michael Watkins	of 11633

I certainly agree with your point of view Malcolm; the tricky question is whether there is a more or less straight line (even looking at it from 20,000 feet) from here to some distant much higher level of prices. Its hard to know. There are all sort of things that can take place between now and then. For example of far-out thinking, I would not be surprised to learn that there are specific contingency plans in the US to slow economic growth, even induce recession or worse, in order to extend reserve life spans. A couple of other factors to remember for those not following pricing closely: - Domestic oil costs more - Drilling activity in the US peaked in 1981. There are not many more rigs operating now in the US than there were over the past four years on average, although the number so far this year is definitely up - 1249 as of September vs 1032, 830, 1156, and 918 in prior years in reverse order. - Domestic output in the US continues to drop, even as more rigs are out there over the past few years. This trend will not reverse. By 2025 the Department of Energy forecasts domestic production will be down by almost 1/3 (approx a 0.9% drop each and every year). That projection might be too optimistic, by the way. Domestic production this year dropped 4.7% year over year for the first 330 days of this year. Imports were up 3.8% over that same time frame. (cumulative daily averages over that time period) Total products supplied for domestic use up 3.0% over that time period. Total net imports up 5.3% (Canada supplies a ton of refined products). So by all accounts, demand is booming and supply hasn't increased that much, but worse for stability, more and more of the supply is foreign. Fortunately for Canada, much of that supply comes from north of the 49th parallel and is likely to continue even if our prime supplier status is surplanted by other far off foreign sources. And we get paid more for this oil too. Bonus. To me it seems only a major depression could bring oil down appreciably, but perhaps inflation will do quite the opposite before then ;-) Thankfully charts tell us what people are willing to pay; if one is worried about noise, the monthly or weekly time frame charts allow participation in the major trends without being chopped up with short term variation.

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To: Taikun who wrote (8236)	12/3/2004 5:56:32 PM
From: a.handbag.	of 11633

BNE raised its distribution by one cent to 18 in October, then by another cent in November. It has now taken back that last cent. I don't think one can generalise "distribution cuts" from that rather flaky behavior. The thing that strikes me most about the geopolitical situation, and by implication the effect on the oil price, is that Bush has raised expectations that once elections are held in Iraq it will once again be "mission accomplished". I just don't see it turning out well. Elections are the easy part, although that is a stretch in that situation. The difficult part is having the results accepted and acted upon. Am I alone in thinking that Iraq is not going to settle down as a stable democracy, with foreign investment piling in to rejuvenate and develop the oilfields? I don't know what is going to happen, but I doubt it will be good for the supply side of the oil equation.

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