Publications: Notes at the Margin

The Global Economy at a Tipping Point: Implications for Oil; Capital Discipline Downside: Antitrust Lawsuits (February 14, 2022)


This Notes at the Margin covers two discrete subjects. We begin by addressing the global financial situation. The US Bureau of Labor Statistics reported on February 11 that the US Consumer Price Index in January had increased by 7.5 percent year over year from January 2021. The financial community’s response was immediate. Interest rates will rise, possibly rapidly. The higher rates will have serious implications for oil markets because they will put many emerging-market economies at risk, as well as corporations that have borrowed heavily. A “Minsky Moment” may be coming. If it does, world oil use could drop by more than six million barrels per day.


The second half of our report examines the expansion of shale production. Some suggest that ExxonMobil and Chevron should apply capital discipline to their exploration and production expenditures. Here, we argue that the firms’ “antitrust discipline,” otherwise described as avoidance behavior stemming from their prior involvement with long, expensive litigation, will likely encourage them to push ahead quickly with expansions, a place where US independent producers refuse to go.


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