Bloomberg Subscribers Say OPEC Will Blink First -- January 21, 2015

For the archives. Bloomberg is reporting:

U.S. shale drillers won’t scale back output quickly enough for OPEC to avoid production cuts this year, according to a quarterly poll of Bloomberg subscribers.  

Forty-nine percent of analysts, traders and investors surveyed said the Organization of Petroleum Exporting Countries will have to lower its production target this year, while 34 percent said shale drillers will lower output in time. Seventeen percent weren’t sure.

My thoughts on the subject are driven by two sets of data points. The first data set:

• Saudi Arabia can have an immediate effect on price of oil (short term, immediate); if Saudi says they will cut their production in half tomorrow, the price of oil would move up very, very quickly; and vice versa
• shale, Canadian sands can effect price of the medium term (six months); fairly "easy" to modulate drilling in these plays
• deep-sea drilling, off-short drilling, major projects can effect price over long term (2 - 3 years); these projects take years to come to fruition

The second set of data has to do with the two cartels:

• There are two cartels -- the OPEC cartel and the US cartel. 
• The OPEC cartel is organized but members all cheat. 
• The US cartel is "by accident" due to the law banning oil exports. 

It's a conundrum. Not corundum. The latter is a mineral.