(Guest Post by Matthew Ladner)
Must read article in the Financial Times The US Shale Revolution (how it changed the world and why nothing will ever be the same again). The Saudi attempt to wring excess supply from the market is not working in America, in large part because it simply has provided a powerful incentive for efficiency.
Oil producers praying for relief from low prices might take heart from the lost jobs and idled rigs in the US. But the American strengths that made the boom — entrepreneurial culture, depth of knowledge in oil and gas, innovation and supportive capital markets — are now being deployed to keep it alive. Recent history suggests it would be rash to bet against them.
“Look how far we’ve come since 2006,” says Russell Rankin of Statoil. “It’s incredible. So for us to think that we’re through with the technology . . . to say that that’s over is kind of idiotic . . . We’ll always come up with a solution.”
Thus far the U.S. rig count is down but production continues to climb as good ole fashioned American ingenuity extracts more oil from fewer drilling sites. American drillers have been reportedly putting in new supply but not tapping it yet, waiting for a rebound in prices. Oh and then there is this little problem for OPEC: