Chapter 453: A Little Bit Expensive

In a Mediterranean villa, Kevin Taylor walked in the yard with a large fresh steak in his hands.

“Sweetie, you can eat the steak now, I bought a fresh piece of steak for you!” Kevin Taylor walked up to a tiger.

This tiger was raised by Taylor when it was a baby, and it was his favorite pet. When Taylor was on the verge of bankruptcy, he had to sell a lot of his property, but he still tried to feed his tiger.

Ding dong… The doorbell rang.

“Someone is coming, I’m going to open the door!” Taylor threw the rest of the meat to his tiger, turned back, and walked to the door.

In front of the door was a first-generation 1968 Ford Mustang.

Ford Mustangs aren’t very expensive, since they are popular sports cars. But the first-generation Mustang is a classic that was produced more than fifty years ago, so it’s much rarer than many luxury cars. In addition, the Mustang produced in 1968 was a favorite, so people who can afford to drive a classic like that are not ordinary people.

In front of the door stood a balding white man, who was over 1.8 meters tall and in his thirties. His face was thin.

“Jimmy, why did you come here!” It obvious that Taylor knew Jimmy, and he opened the door to let him in.

“Kevin, long time no see.” Jimmy gave a gift box to Taylor and said, “I hope you’ll like the 2003 Clos du Bois.”

Clos du Bois is one of the top 10 wineries in the United States, and it is located in Sonoma, California. Although it enjoys a great reputation, it’s wine is relatively cheap and fine compared with other famous wineries.

“Thank you.” Taylor took the gift box and invited Jimmy to the middle of the living room.

They sat down and began to talk; the white man was the first to cut to the chase.

“Kevin, I’m going to come back!” said the white man.

“Why? You have been retired for three years, and it’s time for you to enjoy your life. Why do you want to come back?” Taylor was very surprised.

“I have to make money. I have run out,” said the white man.

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Taylor looked at the white man in surprise and asked, “I remember that you didn’t gamble and you didn’t have many friends, so what did you do? Where is your money?”

As was known to all, pornography, gambling, and drugs could easily bankrupt people. But Taylor knew well how much money Jimmy had. If Jimmy used his money to go whoring, it would be impossible for him to run out of money. If Jimmy had taken drugs, he could have supplied himself with drugs until his death. What’s more, Jimmy didn’t know how to gamble, and he didn’t have many morally-bankrupt associates, so he shouldn’t have spent his money so quickly.

“I made a failed investment, and I put almost all my money into it. Soon I will lose everything,” said Jimmy.

“So, what did you invest in? And things are different now from the financial crisis of several years ago, even the Wall Street’s evil capitalists are wary now. Some investments may cause losses, but only a few investments would make you lose everything,” said Taylor.

“I invested in oil, shale oil to be exact,” Jimmy said helplessly. “I invested in the exploitation of shale oil with my cooperative partners. In the beginning, we made much money, but then OPEC started to increase oil production, so the price of oil fell sharply. We can’t get profits from our wells, and we lose money whenever we produce a barrel of oil.”

Shale oil was once a resource that was difficult to exploit, but the development of technology, especially the progress of hydraulic fracturing technology, drastically reduced the exploitation costs of shale oil. What’s more, with the further improvement of technology, the exploitation costs were expected to decline further.

The time of return on investment of shale oil was very short, and the pre-investment cycle was only two or three months. The investment cycle of a traditional oil field was five to seven years, which made the exploitation of shale oil a very popular investment project.

The cost of exploiting shale oil in America was between $40 and $60 per barrel, and it varied from region to region. When the oil price was high in the world, exploiting shale oil could bring in high profit and gain quick rewards, so investing in shale oil was very popular in the United States.

Lots of shale oil was exploited in America, which meant America got an increase in its oil production. Thus, it naturally reduced America’s dependence on oil imported from OPEC. In addition, with more shale oil being exploited in America, it even planned to export shale oil to other countries, which would have turned America from an oil importer to an oil exporter. That also meant that instead of being one of OPEC’s customers, America would now become its competitor.

So, OPEC decided to fight back by increasing the supply of oil and lowering the price. Taking the Middle East as an example, the exploitation cost of their onshore fields was less than $10 per barrel, so they were not afraid of a price war.

When the price war broke out, the oil price began to plummet, and the oil price of OPEC was even lower than the exploitation cost of shale oil in America, which meant all shale oil in America suffered heavy losses.

Hydraulic fracturing techniques were used for the production of shale oil, which meant that it couldn’t stop. The principle of the hydraulic fracturing technique was to inject fracturing fluid into the oil reservoir to produce pressure, which would create cracks through which the oil and natural gas would leak through into the drilling hole. In order to keep the cracks open continuously, a type of propping agent needed to be injected into the cracks together with the fracturing fluid. Once stopped, the pressure inside the oil reservoir would decline and the cracks also would shut, which meant everything had been done in vain.

As long as the exploitation of shale oil continued, the investment in shale oil would continue. Even if the investors would suffer losses, shale oil still had to be exploited from the wells. In other words, if a businessman bought a lot of goods only to find that he couldn’t sell his goods at all, he would be forced to sell his goods below cost. The businessman would take a loss, he would take a much larger loss if he didn’t sell his goods at all.

Now, Jimmy was faced with this dilemma. He had invested in shale oil, and even if the market price of oil was below the exploitation cost, he still had to put money into his investment, so he could hold onto his investment until the oil price went back up. But if he stopped his investment, he would lose all his money.

The white man continued to say, “So I’m going to come back to make some money. If I can participate in the Olympics again, that would be great. At least I could get some advertising sponsorships.”

“That’s for sure. You have won six gold medals in three Olympics, so as long as you are in the Olympics, there will be sponsors for you,” said Taylor.

“I’m confident in my physical condition, but I’m 34 years old now, so it’s something I can’t ignore. That’s why I came here. You have been back to your peak physical condition before, so I would like to ask you for help!” Jimmy said earnestly.

“I got back to my peak physical condition because I have a great fitness coach. You may have heard of him, he runs a chain of fitness training centers in Los Angeles.” Taylor smiled and continued, “I can recommend him to you, but I have to tell you, his charge is a little bit expensive.”