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What We Read Today 15 November 2014

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

  • Philae comet lander sends more data before losing power (Jonathan Amos, BBC News) Researchers are thrilled with the comprehensive data returned from comet 67P, but they are going to have to be content with that for a while. The initial 64 hours of battery operation have been consumed and the lander has now"gone to sleep" until enough sunlight has reached its solar panels to recharge the spent batteries. The lander ended up in a mostly shaded location so the wait for recharging will take much longer than planned.

  • Oil prices likely to fall further, says IEA (BBC News) The International Energy Agency (IEA) has announced their assessment of the near-term future for oil prices: They will be lower, at least through the first half of 2015. The discussion 'behind the wall today' is devoted to discussion of the prospects for oil markets in light of the dramatic decline in prices seen this year.
  • U.S. Asylum Seekers May Face Barriers from Border Patrol (Sarah Childress, Frontline) Immigration attorneys' groups have filed complaints that border patrols are not observing the U.S. laws regarding due process for political asylum seekers. Read the comments following the article - Readers do not believe the asylum seekers have any rights under the law.
  • Articles about conflicts and disease around the world

Ebola

Son of Ebola Doctor to Be Treated in U.S. Praises His Sacrifice (NBC News)

Obama Indemnifies Gov’t Contractors From Damages Arising from Importing Ebola to US (CNSNews.com)

Syria

What a Pledge of Allegiance to ISIS Means (Frontline)

Iraq

Islamic state militants withdraw from area around Iraq refinery (Reuters)

Dempsey Considering Placing U.S. Troops Alongside Iraqi Forces (Frontline)

Ukraine

G20: David Cameron warns Russia of more Ukraine sanctions (BBC News)

Russia

Russian aggression against Ukraine a threat to world: Obama (Reuters)

Russia says not involved in recent Ukraine escalation (Reuters)

Putin Said to Plan Early G-20 Exit as Ukraine Casts Shadow (Bloomberg)

Hong Kong

Hong Kong student leaders blocked from taking democracy fight to Beijing (Reuters)


There are 11 articles discussed today 'behind the wall'. All are about the recent decline of oil prices and how the matkets may react going forward.

Do not miss "Other Economics and Business Items of Note", the final section every day.

Please support all that we do at Global Economic Intersection with a subscription to our premium content 'behind the wall'.

There are between 75 and 100 articles reviewed most weeks. That is in addition to the 140-160 articles of free content we provide.

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aisian-markets-benefit-oil-prices

  • Plunging Oil Prices Could Ruin Economics of Keystone Pipeline (Tim Mullaney, CNBC, The Fiscal Times) Now that Congress appears to ready to vote for the Keystone pipeline to bring oil sands petroleum to the U.S. Gulf Coast, the lowered price of oil may have priced the Canadian material out of the market. The Canadian oil is very expensive to extract and needs oil $20 higher than today to be economically feasible.

gasoline-oil-prices

  • Fracking’s Slow-Motion Train Wreck Revealed In New Report (Tina Casey, Clean Technica) Some of the assumed reserves just aren't there, A recent example was the adjustment of the reserve estimate for the Monterrey, CA shale basin (Shale 1). Adjustment might not be the most descriptive verb: the reserve estimate was cut by 96%. Some other studies have suggested the official estimates for ultimate production from some other fields may be optimistic as well. See also next article.
  • Peak Shale Gas Proves As Wrong As Peak Oil (Michael Lynch, Forbes) We sometimes tend to forget that shale also produces gas and that has also been subjected to criticism that estimates of reserves are overstated. This author recounts how some recent previous predictions that fracked gas would play out have come up far short.
  • The Middle East Has A Huge Advantage In The Global Oil Market (Sam Ro, Business Insider) Here is why Saudi Arabia (and its Persian Gulf neighbors) will win a price war if one develops. But are the production costs stable? Saudi Arabia has a very mature process and cost reductions are unlikely to decline from new technology. But other production processes (shale for example) are still on a learning curve and could still lower significantly. For a discussion of why a Saudi price war victory might be short-lived, read Can Saudis beat North Dakota in an oil price war? (William Watts, MarketWatch)

oil-production-costs-globally

  • America Is Driving Less (Doug Short, Advisor Perspectives dshort.com) Doug Short contributes to GEI. The U.S. economy has a shot in the arm for consumption other than gasoline when the price per gallon declines by $0.60. See previous article. Each month at the lower price amounts to $6.35 billion formerly spent on gasoline: (2.92 trillion miles per year /23 mpg) x $0.60 per gal / 12 months per year. If this persisted for one year the amount is about $75 billion. That would be an average near $500 per household.

vehicle-miles-2014-oct

  • Here Are The Breakeven Oil Prices For America's Shale Basins (Sam Ro, Business Insider) But the question of sustainability of prices at the current level (ca. $75 a barrel) is on the table. Nearly half of the shale oil reserves have production costs breakeven levels higher than $75. So new drilling in those fields would quickly shut down if prices remained at or below $75. For why this would significantly reduce U.S. oil production is explained in the second article below. But also see the next article for a different opinion than the graph below would infer.

Click for larger image.
shale-production-costs-US-600x480

  • A Bakken Well's Short Life Cycle (Real Clear Energy) If drillers stop drilling new wells production drops dramatically because of the production profile of a shale oil well over time. Typically half of the total life-production occurs in the first year and a well is almost completely played out in 5-6 years. New drilling is required to maintain production. That is why America's shale oil boom could disappear if oil prices reach and remain in the $60 -$70 range for an extended period (like 1-2 years). The start-up of drilling operations again would be slow because of the economic damage done to the drillers, having lost money on the production that remained in the rapidly depleting old wells. And how many drillers would be bankrupt and never return?

shale-well-production-decline

  • Other Economics and Business Items of Note and Miscellanea

Ideological Foundations of Mainstream Neoclassical Economics: Class Interests as “Economic Theory” (Ismael Hossein-Zadeh, Global Research) Mainstream economics is "autistic"? Wow!

The Pacific Age (The Economist)

How Uber Is Changing the U.S. Economy Like No One Ever Imagined (TheStreet.com)

Senators Ask FDA to Track Antibiotic Use on Farms (Frontline)

The rouble’s rout (The Economist)

Fed’s Plosser: Not Too Worried About Hitting Inflation Target (The Wall Street Journal)


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