The Shale Oil Party Won’t be an All-Nighter, Phibro’s Andy Hall Warns

What I find most frustrating is economic obfuscation and how statistics are manipulated to sell a paradigm. In a nutshell, lying leads to a misallocation of resources and therefore handicaps us in the future. The sustainable output of fracking is debatable, decline rates on wells are not publicised, it is highly subsidised through tax breaks and the environmental effects are unknown and more than likely, lethal. Courtesy of Andy Hall at Astenback Capital Management:

Oil Supply

The speed with which an interim agreement was reached with Iran was unexpected. Equally unexpected was the immediate relaxation of sanctions relating to access to banking and insurance coverage. This will potentially result in an increase in Iranian exports of perhaps 400,000 bpd. Beyond that it is hard to predict what might happen. The next set of negotiations will certainly be much more difficult. The fundamental differences of view that were papered over in the recent talks need to be fully resolved and that will be extremely difficult to do. Also, Iran’s physical capacity to export much more additional oil is in doubt because its aging oil fields have been starved of investment.

As to Libya, it seems unlikely that things will get better there anytime soon. The unrest and political discontent seems to be worsening. Whilst some oil exports are likely to resume – particularly from the western part of the country (Tripolitania), overall levels of oil exports from Libya in 2014 will be well below those of 2013. Continue reading

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