OPEC Needs A New Mission Statement -- June 1, 2015

Earlier today I posted a number of links to stories on OPEC. Add another one, this one from Reuters via Rigzone:

Two landmark events this month will underscore the extent to which the oil market's balance of power has been transformed by the shale revolution.

In Washington, Congress will begin considering legislation to permit the export of crude oil from the United States, reversing a four decade ban put in place after the first oil crisis in 1973/74.

In Vienna, the Organization of the Petroleum Exporting Countries (OPEC) is expected to roll over its crude production target of 30 million barrels per day (bpd) even though prices have fallen more than 40 percent over the last 12 months.

Rather than reduce production to boost prices, Saudi Arabia and the other OPEC members are prepared to continue pumping to defend market share and maximise revenue.

After 40 years when OPEC appeared to play the dominant role balancing supply and demand and influencing prices (sometimes successfully, sometimes not), power has passed to the shale drillers of North America.

Now it is the shale drillers who must decide whether to respond to the recent price rebound by re-activating rigs and completing more wells, at the risk of sending the price tumbling again.

The first event will be political theater: Congressional debate on US oil export. Really? LOL. A blanket reversal of the outright ban won't happen -- ever -- and certainly not during a presidential campaign.

The second event -- the OPEC meeting will be also be all talk. How it all turns out will only be known six to twelve months from now. The OPEC meeting will be a noisy debate between Saudi Arabia and the rest of OPEC. But after the noisy debate, OPEC will do what Saudi Arabia says OPEC will do. OPEC is an organization in name only.

I think there are two data points much more interesting than these two data point-events (Congressional debate on exporting oil and OPEC's fake debate).

First: the White House has clearly stated that Saudi Arabia's security is no longer an American responsibility. Saudi Arabia is on its own, even as the Mideast is more unstable that it has ever been, without American boots on the ground and a half-hearted air response.

Second data point: the US frackers are adjusting; they will do just fine. OPEC's mission statement needs to be revised. 

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M.O.B.

The area we live in -- at the confluence of Euliss, Grapevine, and Colleyville, and south of Southlake Texas, may be one of the most active real estate areas -- private and commercial -- in the US right now. The area is the upscale side of the Dallas-Ft Worth metroplex within walking distance -- very long walking distance -- of DFW, the airport. North of the airport lies Plano where JCP is headquartered (if I recall correctly) and where Toyota's North American headquarters is now located after exiting California sometime in the last couple of years (again, if I recall correctly).

The other night, coming down a major thoroughfare in Southlake, my wife and I saw a huge "For Sale" sign on commercial property with this tag: "M.O.B. and Hospital Attached." Neither of us had any idea what that meant, either M.O.B. or "hospital attached."

Google to the rescue. 

The world’s largest and finest medical complex — the Texas Medical Center — is located just a couple of miles south of downtown Houston.

Over 4,000 doctors work there, performing heart surgeries, treating cancer and delivering about 20,000 babies annually. Many of the hospitals in the Texas Medical Center are ranked as best in the business.

So every ill or injured Houstonian wants to go there, right? Wrong.

The Loop-centric Houstonians may not have noticed, but there’s a huge trend to take medicine to the far flung suburbs. People in Katy get sick, too.

A tremendous amount of new medical buildings and hospitals have been built in the Houston suburbs. Medical institutions are clamoring to get a toe-hold in outer suburbia.
Therefore, suburban medical buildings are considered red hot real estate.

Real estate experts who specialize in the niche say real estate players are dying to get into MOB investments. (MOB is industry lingo for Medical Office Buildings. Apologies to Rice University’s Marching Owl Band, also known as MOB.)

The article was posted July 26, 2010 -- almost five years ago. And I never knew. Until now.