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Bienvenido “Nonoy” Oplas Jr.
Cheap Oil, Shale Revolution
and World of Abudance
Presentation at Development Economics class
Management Engineering students
Ateneo de Manila University (ADMU), Quezon City
22 January 2015
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World Oil Prices as of Yesterday, January 21, 2015
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From Bloomberg, “Oil Prices”, December 31, 2014
“OPEC price war” only explains partially. Members did not really push
their oil output that high. Rather, the main explanation is this…
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Four-week moving average of US oil output, thousands of barrels per day.
Source: http://www.businessinsider.com/us-energy-production-boom-
charts-2014-12
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(US shale oil output
alone, from around 6.5
M bpd 2013 to 9+ M
bpd late 2014 until now.
Plus Canada shale…)
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Sometimes conflicting
headlines from the same
media outlet, but largely
towards the optimistic side –
cheaper oil.
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„Goldman Sachs researchers say
that oil prices would have to drop to
$40 per barrel for six months, down
another 15% from their current
level, to "keep capital sidelined." ‟
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From Citywire.co.uk:
“'The key message from the Kingdom of Saudi is that they will
maintain production and tolerate low oil prices in order to drive (1)
market share and (2) to drive Iran to regime change. To be clear, we
believe this is all about Iran, and not about „hanging the US shale
assets out to dry‟,' Nomura said.
A beautiful (conspiracy?) theory with a good basis, part of the „OPEC
price war” thesis
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“The biggest winner
would be
the Philippines,
whose economic
growth would
accelerate to 7.6
percent on average
over the next two
years if oil fell to $40,
while Russia would
contract 2.5 percent
over the same
period, according to
an Oxford
Economics Ltd.‟s
December analysis
of 45 national
economies.”
Bloomberg, “How $50
Oil Changes Almost
Everything”, Jan 7, 2015
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• Cheap oil means lower cost for farm tractors and backhoes, fishing
boats and shipping lines, cars and buses, airplanes. Social and
economic savings will be big as the costs decline.
• We are better off now than yesterday, despite all the pessimism and
envy that many people exhibit.
• We have entered a
period of rising and
continuing world
abundance.
• The best is yet to
come. The young
people today are
lucky. But luckier
will be their
offspring.