{"id":16934,"date":"2016-01-26T14:25:13","date_gmt":"2016-01-26T19:25:13","guid":{"rendered":"http:\/\/olduvai.ca\/?p=16934"},"modified":"2016-01-26T14:25:13","modified_gmt":"2016-01-26T19:25:13","slug":"opecs-trillion-dollar-mistake","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=16934","title":{"rendered":"OPEC\u2019s Trillion Dollar Mistake"},"content":{"rendered":"

OPEC\u2019s Trillion Dollar Mistake<\/a><\/h3>\n
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A few days after Christmas I appeared on\u00a0CNBC Asia\u2019s Squawk Box<\/a>\u00a0to discuss the volatility in the oil market. Bernie Lo asked a question about OPEC\u2019s strategy, and I characterized their decision to defend market share as \u201ca big, costly mistake\u201d that had already cost the group over $500 billion in 2015 and would likely cost them that much again in 2016.<\/p>\n

I followed that appearance up with an article for Forbes called\u00a0OPEC\u2019s Trillion-Dollar Miscalculation<\/a>\u00a0(which went viral and received more than 100 times the traffic of their typical energy article). In that article I detailed the numbers behind my assertion.<\/p>\n

Two weeks later, Continental Resources CEO and shale drilling pioneer Harold Hamm went on CNBC and\u00a0reiterated my argument<\/a>. He called OPEC\u2019s strategy \u201ca monumental mistake for them, I might add, a trillion-dollar mistake.\u201d While there were a number of responses to Hamm\u2019s comments that displayed varying degrees of schadenfreude over the huge decline in his net worth, I didn\u2019t see much acknowledgement that the point is correct. So let\u2019s review.<\/p>\n

Related:\u00a0Saudi Aramco Chairman Talks Oil Down<\/strong><\/a><\/p>\n

By the time of the 1973 OPEC oil embargo, OPEC\u2019s share of global oil production had been rising for years. In 1973 OPEC was producing more than 50 percent of the world\u2019s oil. But in response to the embargo, countries all over the world implemented a number of changes to gain back some degree of energy security (addressing both supply and demand side), and OPEC\u2019s market share went on a decade-long decline. By 1985, OPEC\u2019s share of global oil production had fallen to 27.6 percent, but by 1995 it had once again risen to above 40 percent. In 2008, just as the shale oil boom in the U.S. was beginning, OPEC\u2019s share reached 43.8 percent.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

OPEC\u2019s Trillion Dollar Mistake A few days after Christmas I appeared on\u00a0CNBC Asia\u2019s Squawk Box\u00a0to discuss the volatility in the oil market. Bernie Lo asked a question about OPEC\u2019s strategy, and I characterized their decision to defend market share as \u201ca big, costly mistake\u201d that had already cost the group over $500 billion in 2015 […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3],"tags":[964,11972,1775,595,5332,600,9141],"class_list":["post-16934","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","tag-cnbc","tag-oil-market-volatility","tag-oil-price-collapse","tag-oil-production","tag-oilprice-com","tag-opec","tag-robert-rapier"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16934","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=16934"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16934\/revisions"}],"predecessor-version":[{"id":16935,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/16934\/revisions\/16935"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=16934"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=16934"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=16934"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}