Ann: Trading Update, page-54

there are 3 things that go against the shale explosion theory

a - trump wants to tax imports - that will drive increased prices and retaliatory measures. china isnt going to allow trump to add 30% to goods it sells to US consumers but keep buying oil from US at floating rate. and china's refineries are the big marginal buyer of oil so they set price direction

b - trumps initiative doesnt change the math per well head. if producers could make attractive enough returns at 30 they would alreayd have been doing so.

c - the inverse correlaiton of usd to usd oil is broken. thats been very clear over past 2 years - since rise of US energy self sufficiency oil and usd have moved together. I think its quite likely thats because of the gdp correlation - rising oil price is now big net benefit to US profitability and so USD rises with rising oil.

the stock market has also moved to the came correlation

if trump puts up tarriff barriers its likely majority US oil will stay in US and brent oil will stay in Europe/Asia.

but even if it doesnt - the costs of transport typically mean non value added US product wont compete too successfully vs 'local' supply in Asia/Europe.

US has been producing $10/t coal for years but could never succeed selling to Asia for the transport cost.
Oil is similarly bulky item and the math would be reasonably similar as a result.

most likely there would be some temporary weakness in oil price if US pushes to aggressively sell oil to OPEC buyers - but the lower it goes the more shale drillers will go out of business again - same as just happened

natural gas seems most susceptible to the theory

at the moment i find all the analysis on oil - and on econoimic outcomes generally for the US trump plans - is all incredibly one sided - with no consideration of the 'next stage reactive replies'.

that shows people have forgotten what drove globalisation in the first place - that protectionism erodes price and quality competitiveness and drives price inflation