The Big Gusher
Over at a financial forum...
More regarding oil prices, but first, we ask where's the money in oil these days? HESS has made the transition to exploration and production having exited ALL downstream operations (refining, distribution, retail). Food for thought, moving West...
Back on the right track... yesterday we Nattered about an overleveraged, contrived and manipulated oil market. Today, we Natter about some supply/demand issues, the new paradigm of tight shale and potential production cuts.
P's Theorem of Greater Efficiency is spot on, as the global vehicle fleet churns and turns, less burn due to higher fuel efficiency, so less demand. As for any industry funded boogeymen that have nothing to do with supply side economics, outside of aiding and abetting an orchestrated production squeeze, both in the field and at the refinery level.... witness, there have been no production declines due to RESOURCE DEPLETION as we are getting more efficient, effective and productivity has increased per well drilled and pumped (head).
This is the new paradigm which has OPEC, Venezuela, Russia and greedy speculators exactly where they should be, groveling on their knees in their own blood and drowning in $30 oil. With a 60% decline in rigs , we are still producing at a paltry 600Kbpd decline from the ALL TIME HIGH. Oil debt? The big fish with deeper pockets will swallow the small and eventually bring those resources online.
Don't forget we are the Arabs and in the new paradigm, tight shale production is now the swing producer. If OPEC cuts production and prices temporarily rise, shale drillers would increase production, and prices would then fall back. So, an OPEC production cut would mean lower long-term revenue, and an OPEC production increase would mean lower short-term revenue, resulting in fewer shale drillers/shale wells, which would result in higher long-term revenue.
Go ahead, cut OPEC production, force oil back up, and they won't unless they are stupid. Oil stabilizes at $35-45 or even higher due to production cuts? A better price point at which to put the oil barons out of our misery by turning the spigot back on full.
Speaking of which, we have 10K fresh wells drilled and still waiting to be tapped in ND alone. What's that sound? Oh, it's those guys who are already on their knees, starting to suck "financial wind" on the big gusher that's coming.... For further edification, see here and here. Out.
More regarding oil prices, but first, we ask where's the money in oil these days? HESS has made the transition to exploration and production having exited ALL downstream operations (refining, distribution, retail). Food for thought, moving West...
Back on the right track... yesterday we Nattered about an overleveraged, contrived and manipulated oil market. Today, we Natter about some supply/demand issues, the new paradigm of tight shale and potential production cuts.
P's Theorem of Greater Efficiency is spot on, as the global vehicle fleet churns and turns, less burn due to higher fuel efficiency, so less demand. As for any industry funded boogeymen that have nothing to do with supply side economics, outside of aiding and abetting an orchestrated production squeeze, both in the field and at the refinery level.... witness, there have been no production declines due to RESOURCE DEPLETION as we are getting more efficient, effective and productivity has increased per well drilled and pumped (head).
This is the new paradigm which has OPEC, Venezuela, Russia and greedy speculators exactly where they should be, groveling on their knees in their own blood and drowning in $30 oil. With a 60% decline in rigs , we are still producing at a paltry 600Kbpd decline from the ALL TIME HIGH. Oil debt? The big fish with deeper pockets will swallow the small and eventually bring those resources online.
Don't forget we are the Arabs and in the new paradigm, tight shale production is now the swing producer. If OPEC cuts production and prices temporarily rise, shale drillers would increase production, and prices would then fall back. So, an OPEC production cut would mean lower long-term revenue, and an OPEC production increase would mean lower short-term revenue, resulting in fewer shale drillers/shale wells, which would result in higher long-term revenue.
Go ahead, cut OPEC production, force oil back up, and they won't unless they are stupid. Oil stabilizes at $35-45 or even higher due to production cuts? A better price point at which to put the oil barons out of our misery by turning the spigot back on full.
Speaking of which, we have 10K fresh wells drilled and still waiting to be tapped in ND alone. What's that sound? Oh, it's those guys who are already on their knees, starting to suck "financial wind" on the big gusher that's coming.... For further edification, see here and here. Out.
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