Well done. TY. If the barrel price of shale oil comes down to $25, the Saudis will eventually go bankrupt, and American consumers would be very happy with the price of gasoline.
I worry about major disruptions if supply is not sufficient beyond 20 -30 years. Long after I will be pushing up the daisies, I'm sure.
America is genuinely blessed with the resources to produce/extract raw energy. The question becomes do we have the will to create the means to convert those resources into useable energy?
Excellent analysis.
Worth reading the whole thing carefully.
Thanks for posting.
LS, this is an amazing analysis. Will you give permission to reprint and share?
Thank you, Larry, for taking the time to write this informative and easy to understand review.
Brings back my worry pre-election ‘16 about the effect of a Clinton regime on our burgeoning shale industry. One of many reasons why a Republican with understanding of the critical importance of deregulation had to be elected, i.e., only Trump, never anyone from the political world.
Thank you.
“Most countries simply lack the sort of financial depth required to even attempt a small shale industry.” Suspicious simply because I cannot think of another country that can do shale work.
Same engineers worked on the XB-15 rocket plane in 1960 and shale gasification in 1980 in Canoga Park, CA. Shale gasification is totally easy compared to the XB-170 and XB-15 rocket planes.
It is a crime that Canoga Park now has gas for $3.43 a gallon. It should be $1 per gallon maximum.
$25/bbl!
That will rock the world. It is going to significantly support the US economy, for the long haul.
I think that global demand is growing faster than US production, so market prices should stay well higher than that. But the surge in American production (an additional 1.5 million barrels per day, every year) will be a strong force keeping prices from going very high. OPEC has already lost a lot of their former power to drive up prices.
If/when recession drops demand growth below our production increases, it will be other (higher cost) producers that lose market share, rather than us. With such a low cost of production, our continued production growth is insulated from the business cycle.
Pumping oil is like printing money - without the inflationary hangover. It is a gusher of real wealth, and stimulates a bunch of other basic industries, like steel and transportation.
While I disagree with the author’s opinion that other nations around the world will not be able to frack for oil and gas, let me sing the praises of American Frackers.
IMAGINE, without fracking (and Trump’s unshackling of the industry) what the cost of oil would be when Iran said they’d block the Strait of Hormuz.
We’re talking over $100 bbl. in a hurry.
I like the sound of this.