that has directly resulted in a
positive growth of the GNP and negates any fallout of reduced Construction
Projects?
The attached
article, is a telling example of the incredibly flexible and efficient US Economy
and Technology, that was able to weather the price drop, but nevertheless be
able to reduce the industry costs by more than 50% from the cost of production
of a Barrel of Shale.
So when the
Middle Eastern Countries who hoped that the price drops of over 50% would
decimate the Shale business, they were sadly mistaken as the US was able to
more than match it by cost reduction out of efficiency and technological
improvements.
The consequence
of this for long term price stability at lower prices, and its devastating
effect on Middle Eastern Economies in the longer term, cannot at the moment be
understood by many policy makers. This has consequences for the stability of
the Middle East as they will not have sufficient surpluses to subsidize their
ever thirsty, fast growing populations.
If not foreseen,
the possibilities of major implosions is more than certain, which will affect
the political balance in the Middle East. Those economies that have been able
to wean themselves out of oil dependency will most certainly benefit, but
others like Nigeria and Venezuela will face an uncertain future as they are
dependent on oil to run their economies.
Even Saudi
Arabia with an increasing population will face pressure to abolish the monarchy
or at least significant part of the largesse paid to the huge Royal Family of
more than 4000.
We presume that
by this time, Sri Lanka would have changed its human export structurally to
essential and skilled jobs in these countries, that the local populations will
not have the skills to replace, and thereby be cushioned from the impact.
The flip side
for Sri Lanka’s energy security will be the cost of extraction of Oil and Gas
from our own offshore fields, which will not become a priority in the future,
and we should turn more to cleaning up the environment, and the use of
renewable energy, and making our energy use more efficient, and reducing energy
wastage both by more fuel efficient vehicles and our industrial and home energy
consumption patterns.
The renaissance
of the US economy will be at hand as the world’s largest producer and consumer
of cheap energy, and it should be consequent upon Sri Lanka being ready to cash
in on those opportunities presented without leaning to the China orbit for help
and trade.
The Chinese
economy will face greater pressures on cleaning up the mess they have created
in their environment and the aging population, and health consequences of
industrialization and non-communicable diseases spiraling out of control. If we
predict we will benefit! That should be the slogan. We must look into what if
scenarios and be prepared for all outcomes.
1 comment:
I would suggest read article and comments carefully.
Excerpt
The typical production profile for a shale oil is initial high, which falls away quickly and has a relatively long tail. Many producers have 12 month price hedges to secure banking covenants (hence we are still in the forward sales period, which will end in approximately six months time). Around October/November, an enormous number of oil shale providers will go bust - and there is US$1tn of debt that is in real trouble if oil prices do not recover above current levels.
I am pretty impressed you can see an US economic recovery. That many trillion debt debt is not going away. The Chinese who held quite a bit of that debt have been divesting the dollars and buying hard assets or loans to other countries. example Lanka, Chinese are giving loans and leasing infrastructure. Classic divesting and hedging.
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