U.S. Shale Gale vs. the Debt Leviathan
The wind was blowing so hard on the banks of the River Thames we had to replay it a few times to hear correctly.
“The need for OPEC to…”
We turned up the volume some more…
“The need for OPEC to be a player in the U.S. oil market isn’t really there. We’re not going to be depending on them like we used to.”
There it was.
We were listening to a homemade video update that our own Matt Insley and Byron King sent to us this morning while they were across the pond in London.
They were our muddy boots on the ground this week at the Platts Crude Oil Conference.
“That means OPEC is going to have to put their crude out into the global oil markets, and the way that I see it,” Matt explained, “there’s not going to be enough demand for that.
“They’re either going to keep it in spare capacity where they’re not going to get any money for it,” he went on, “or they’re going to flood the market with it to get more product out there and make a little more money for their coffers.”
That’s too bad. The petropoly has bills to pay and setting the price of oil was a simple way to balance their budgets. But nowadays, that control is slipping through OPEC’s fingers.
“We’re most likely going to have a pullback in oil prices. “ Matt told us, “It looks like the efficient price for oil in the U.S. would be $80, but we could see oil head lower than that.”
That’s great news for the U.S. economy, but boy, it stinks to be Venezuela or Oman …
As we go to press today, oil futures inched above $95, but Tim Evans at Citi Futures chalked it up to “short-term traders who are trying to pick up quarters in front of a steamroller.”
In other words, those price increases won’t last long.
“We’re about to see very dramatic changes in the flow of world oil,” Byron chimed in.
“Essentially, North America is so isolating itself from much of the traditional import market that we see entire regions in South America and West Africa have essentially stopped or dramatically scaled back what they export to the U.S.
“The shale revolution in is truly a global revolution even though most of the drilling is happening in just a few states in just a few basins. It hasn’t spread out to the rest of the world.”
That’s if the politicians don’t screw the pooch first.
But hey, we’re only in Round 3 of this bare-knuckle donnybrook between America’s energy revolutionaries and the political leeches plotting to suck them dry.
Right now, it seems like the suits just east of the Potomac are about to be dealt a haymaker, but we shouldn’t count the politicos out… they’ve been known to throw a rabbit punch or two when the ref has his back turned.