Publications: Notes at the Margin

Sleepwalkers Can Ruin Markets (September 15, 2014)


Sleepwalkers (speculative crude oil inventory holders) are about to create real problems. Market salvation (a.k.a., stability) will depend on the forbearance of officials in oil-exporting countries and perhaps the United States with regard to adjusting output. If they are not patient—and our view is they will not be—then we will see very low prices for some time to come. Prices will be low enough to arrest but not end shale development in the US. They will be low enough to halt and possibly extinguish Canada’s tar sands program. They will be sufficiently low to put Russia in a depression like we have never seen.


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