i am still trying to work out that somehow people are not that stupid or what other game is being played wrt the oil shale - plenty Cos gone broke in last POO fall and yet as u say, those still standing get straight back into it when the price recovers - is it that the first of them get a win and the slow coaches behind when finally up and running miss out and go bankrupt.
I do know one thing is that generalisations cannot be made across the US as there are sweet spots and others that are just plain poor areas. - one should expect that the outer poorer areas will never get back into it until prices are >100, but also the technical advances too are having their effect in improving economics and hence areas that may have been marginal moving them back into potential money making.
Because no one person or entity controls the overall production it is every man for himself - typical capital system - and so it is likley that this rise and fall in prod will continue through several more phases over the next 2-3yrs until maybe the production areas are reduced to the sweetspots and what is left in them. it is hard to gauge exactly what reserves are in these rocks, especially with increased technology, which will continue i am sure for some time yet.
the lower for longer scenario really seems to be hard to shake for the moment - the current response in the US surely ensures it will continue.
One of the arab princes recently said OPEC can only assist in short -med ium term adjustments but cannot control structural changes - suggesting the US oil shale is a strucutral change whch OPEC can merely look on and watch the US respond quickly to increased prices.
no idea where this is going but i have to say i am beginning to believe the lower for longer POO - it is hard to see how this dynamic will change for the next couple of price rises and enevitable falls.
AWE Price at posting:
46.5¢ Sentiment: Hold Disclosure: Held
