The latest IEA report on Crude supplies has got me thinking, a new accomplishment for the IEA who have been woefully behind the curve on most of the major energy trends of the last two decades.
But this time, it seems to me that the IEA and its lead economist Fatih Birol, has gotten much right and is finally in front of the curve on the most important trends that we need to keep in the front of our minds if we are to successfully invest in the oil patch.
The first major point made by this latest report was in the ramping production from shale of crude supplies in the United States. We are not just one of the leading nations in the potential for shale crude production but clearly in the lead in the application of the capital and technology to get that oil out and to market. The major headline to come from the report which was picked up by all the major news media was the prediction that the US would become the leading producer of crude by 2015.
This was the obvious and predictable headline; of 'Saudi America' and the prospect of energy independence -- but while that's an interesting and important trend, what it does for us as investors is marginal. More important was the secondary point of the IEA report, the part where Birol really shines, recognizing the fast ramp up in production of the oil shale plays, but also predicting the increasing capital required to keep that growth going and the ultimately limited resource base of the shale…