US Shale Oil And OPEC: SeekingAlpha
Jennifer Warren over at SeekingAlpha is reporting:
In this arguably "new" hydrocarbon-plenty era, economics will drive
investment decisions. Exploiting the shale oil and gas is relatively
expensive. And a subtle but sticky-priced floor is likely emerging given
supply realities. Given that U.S. production would be hit hardest by
any serious decline in oil prices, E&P firms have been hedging
portions of production, up to three years ahead in cases. Between U.S.
firms' financial hedges in place and OPEC's lever of production cuts, if
needed, the volatility that oil could face is becoming lessened to a
degree by new supply realities. In other words, the price volatility
from negative supply shocks of years past is temporarily muted because
of U.S. oil production.
In the nearer term, demand shocks and
dampeners, such as economic crisis or recession and U.S. policy
paralysis that squanders a decent recovery, are more of a catalyst for
oil prices to fall. The EIA reports
that "energy use in non-OECD countries is projected to grow by 2.2% per
year, and the share of non-OECD energy use is expected to rise from 54%
of total world energy use in 2010 to 65% in 2040." Growing developing
countries will mop up excess supply. Further out on the horizon is the
impact of greater fossil fuel consumption and whether the closed system
of the earth's ecosystem can handle it.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.