Have oil markets had enough of low prices?

EIS fig_es-6 oil production six cases

SOURCE: US EIA There is an interesting convergence in views by the global agencies that track oil supply and demand suggesting that US oil production is finally trending down in two of the biggest onshore tight oil plays at Bakken and Eagle Ford while global oil demand seems to be creeping up. The question is will this leveling off of US oil production growth be enough to bring world oil prices to more sustainable higher levels? US EIA started it in its Annual Energy Outlook forecasting …Continue Reading »

Give OPEC what it wants, and give it to them hard!

The New Oil Equilibrium

OPEC will Regret Squeezing US Shale Oil. At the current oil production pace the US is expected to set a new all-time high in oil production surpassing 9.637 million barrels of oil per day by 2016. This top’s the 9.077 million barrels a day in 2014, then the highest level produced since 1983 according to the US Energy Information Administration. IHS reported that only about 20% of US tight oil producers need $90 a barrel to break-even and "about 80% of the tight oil estimated to be pumped in …Continue Reading »

Why Keystone XL Matters!


In his State of the Union speech President Barack Obama effectively tried to take credit for rising U.S. oil and gas production and lower gasoline prices as if to refute the polls that report that the country seems to have the opposite view---the country is not moving in the right direction. Never mind that his Administration has thrown up one roadblock or regulation after another to the use of fossil fuels. “At this moment—with a growing economy, shrinking deficits, bustling industry and …Continue Reading »

Four Stages of Oil Market Volatility

Oil Price Volatility

Crude oil prices continue their downward movement with the question most asked---when will this end? The answer of course is that commodity prices especially fuels are notoriously volatile. The official OPEC market report for December with data through the end of November described it with precise technical language saying market conditions reflect “reflect bearish global crude oil market fundamentals as abundant supply remains significantly higher than demand.” The answer is that prices will …Continue Reading »

Have the Saudi’s Underestimated the US Oil Industry?

EIA fig_9a  Crude YOY 2012 2013

SOURCE: US EIA The decision by OPEC to hold production targets level caused oil prices to fall another ten dollars per barrel in the aftermath. There has been the expected wailing and gnashing of teeth with talk in the media and elsewhere about how the Saudi’s were taking aim at the US shale revolution. There may even be some measure of truth to it. We understand the Saudi’s and the rest of OPEC mat be irritated at the US for finding a way to escape the bondage of high imported oil …Continue Reading »

I’m Talking to the OPEC Man in the Mirror!

EIA US oil reserves keep rising

OPEC crude oversupply " I'm talking to the man in the mirror.  I'm asking him to change his ways.. . . " That is the Michael Jackson song that keeps replaying in my mind as I read the report from the IEA and OPEC itself, that the cartel and non-OPEC members including the US overproduced OPEC's oil production target of 30 million barrels per day in October 2014 by more than 600,000 barrels/day to 30.6 mb/d. This incremental increase in swing productive capacity is the factor to watch for your …Continue Reading »

The US Skunk at the OPEC Lawn Party!

Spot Prices

SOURCE US EIA The press is full of speculation about the cause of OPEC’s fall in oil prices and the motivation behind Saudi Arabia’s decision to ‘hang tough’ with production quotas unchanged from their 30 bbl/d target. Despite what the Saudi’s have been intimating for weeks, the industry seemed to expect OPEC to blink and cut production at their November 27th meeting. It may have been Thanksgiving in the US but there was little to be thankful for around the OPEC meeting table in …Continue Reading »

Temperatures are not Rising over Climate Change except at the IPCC Conference in Paris


SOURCE: http://www.bbc.com/news/science-environment-28870988 Prepare yourself for wailing and gnashing of teeth as the UN International Panel on Climate Change advocates meet in Paris. The Telegraph newspaper article in the UK summed up the Panel’s view: “The world is on course to experience “severe and pervasive” negative impacts from climate change unless it takes rapid action to slash its greenhouse gas emissions, a major UN report is expected to warn on Sunday. Flooding, dangerous …Continue Reading »

Should the US Lift the Ban on Crude Oil Exports?

US EIA AEO2014 fig_es-1

There is a growing debate over lifting the US ban on crude oil exports.  Recently US Energy Secretary Ernest Moniz said he thought it time to review the prudence of the exports ban during the 2014 quadrennial review of US energy policies.  Not everyone has responded favorably to the calls to ease the ban so expect a loud debate over the year ahead. For more than thirty years, the United States has banned crude oil exports.  The logic at the time was energy security concern both from sending oil …Continue Reading »

The Big Shift in Energy is a Complete Reversal of Fortunes

As we all read the 2012 economic reports last year we collectively thought of the right technical terms---the results sucked!  GDP growth had slowed to 1.5%, unemployment rates remained stubbornly high at 8.2% over average nationwide but the damage to youth, black and Hispanic and those with less than college educations are still horrible.  Clearly we need an economic shot in the arm. How could there possibly be any good news on the horizon? The good news is the big shift in energy is a …Continue Reading »