Tag Archives: IEA

Regardless of the geology, climate policy and waning investor interest will likely result in a lot of oil being left in the ground.

The oil and gas industry has enjoyed a golden era under the Trump administration, but it may only be temporary. 

If the US shale oil industry is still not profitable – after a decade of drilling, after major efficiency improvements since 2014, and after a sharp rebound in oil prices – when will it ever be profitable?

The International Energy Agency sees North American shale peaking towards the early part of the 2020s and declining thereafter. By the 2020s, the world will once again be dependent on traditional sources of supply – largely from the Middle East. But for new sources of supply that are not state-owned, the industry may have to shift back to the mega deepwater projects that they are beginning to shun today.

For the next year or so, tight oil wells will not be commercial except in the best parts of the best plays. Until market fundamentals of supply and demand come into balance, prices will remain low. Clearly for now, the party is over for tight oil.

With spare capacity shot and major new sources of oil not coming online in a few years, the world may end up struggling to meet rising oil demand. That could cause oil prices to spike.

Putting numbers behind it, with worldwide production running some 95 million barrels per day, and assuming $55 per barrel for oil, the market for crude oil is about $5.2 billion per day. Each $10/Barrel change is worth nearly $1 billion/day or $365 Billion/year for the worldwide crude oil market. Add the worldwide equity market caps of oil and oil related equities and debt you have a scandal that is in the trillions.

As families in the United States steel themselves for the possibility of another sweltering summer with rolling blackouts triggered by high demand for air conditioning, it’s a good time to remember that many families throughout Africa work and live in buildings with no electricity. In areas that do have the utility, frequent power outages are a constant reminder of the …