Publications: The Petroleum Economics Monthly
The New Economics of Petroleum (August 2016)
Economists and analysts who follow oil markets are unanimous. The high inventories accumulated over the last two years, which now total one billion barrels, must be liquidated or worked off before markets can stabilize. This view, which OPEC and the IEA endorse, also appears in presentations by most investment banks, consultants such as HIS CERA and PIRA, and many excellent academic economists. In all cases, this "standard" perspective indicates an analytic process that sees the market in terms of production and consumption. Invariably, inventories are an afterthought. Stocks accumulate when production exceeds consumption and decline when consumption exceeds production. Inventories beyond amounts needed to facilitate the industry’s operation are seen as an accident that requires correction. This perspective has also dominated the integrated oil industry for decades. This rationale characterizes an economic approach to inventory management and operational decisions that became obsolete in other economic sectors by 1980 if not before. In the current situation, inventories can be an asset rather than a curse.
The August 2016 report focuses on petroleum’s new economics. We suggest the effort of producers to control markets by forcing stock draws will fail. We also show that oil-exporting nations can produce more oil, sell more oil at higher prices, and even achieve higher incomes if they embrace the new market instead of rejecting it.
- The Petroleum Economics Monthly
- The Failure of Traditional Oil Market Fu...
- Will Investor Aversion Bring Higher Oil ...
- The Hedge Fund War on Fracking (August 2...
- IMO 2020: Implications for Crude (Januar...
- Understanding Price Behavior During Oil ...
- $200 Crude, the Economic Crisis of 2020,...
- IMO 2020: Economic Prospects (June/July ...
- Brent Is Dated (November/December 2017)
- The United States: Center of the Global ...
- A Tale of Two Markets (September 2017)
- The Triumph of Markets (August 2017)
- Twilight of Big Energy (July 2017)
- Failure to Learn from History: The Produ...
- A Lesson in Disruption (May 2017)
- Putting a Finger in the Oil Market Dike ...
- Oil's Johnny One-Note (March 2017)
- The Don Quixotes of Oil (February 2017)
- Markets Take Over (January 2017)