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Market Power, Production (Mis)Allocation and OPEC

Discuss research and forecasts regarding hydrocarbon depletion.

Market Power, Production (Mis)Allocation and OPEC

Unread postby vox_mundi » Mon 11 Sep 2017, 11:35:39

OPEC Added Billions to Cost of Oil Production, New Research Says

By limiting production in member countries, OPEC drove up oil production costs and reshaped the world’s oil industry.

DURHAM, N.C. – OPEC’s effects on the world economy extend far beyond the prices that consumers see at the pump, says new research from Duke University, KU Leuven and UCLA.

Over the course of 40 years, the oil industry cartel not only drove up the cost of crude oil production by some $160 billion, it also helped change the direction of the oil industry, the authors say.

The authors examined 34 years of data on crude oil production, from 1970 to 2014. The study was unusually comprehensive, covering 13,248 oil fields worldwide — virtually all of the world’s oil active fields. The results appear online in a new National Bureau of Economic Research (NBER) working paper.

All of these expensive technologies have evolved because OPEC countries limit oil output.

“Many of these technologies – fracking, for instance — would not exist if not for the activities of the OPEC cartel,” Collard-Wexler said.


While the paper focuses on OPEC, the findings’ implications extend to the role of monopolies and near-monopolies, the authors say, suggesting that monopolies’ economic harm can extend far beyond prices.
“Our findings suggest that monopolies raise the cost of production”

Prices alone may be too narrow a focus,” Collard-Wexler said. “Regulators examining a proposed merger may want to consider other potential economic effects of monopolies, too.”

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“There are three classes of people: those who see. Those who see when they are shown. Those who do not see.” ― Leonardo da Vinci

Insensible before the wave so soon released by callous fate. Affected most, they understand the least, and understanding, when it comes, invariably arrives too late.
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Re: Market Power, Production (Mis)Allocation and OPEC

Unread postby rockdoc123 » Mon 11 Sep 2017, 12:46:23

The operating costs quoted are incorrect. The author seems to be mixing full cost breakeven costs with lifting costs. As an example for Ghawar the lifting costs are a bit less than $7, likely in the $5 range. But for the Bakken $51/bbl reflects a breakeven cost or the cost to explore, develop and then lift a barrel of oil. Lease operating costs (or lifting costs) for the Bakken are generally less than $10/bbl. In the north sea OPEX is high at around $40/bbl for some fields a product of expensive platforms and necessary maintenance.
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Re: Market Power, Production (Mis)Allocation and OPEC

Unread postby Plantagenet » Mon 11 Sep 2017, 13:13:51

More bone-headed errors occur in the panel describing Alaska.

There is no oil producing are in Alaska called the "North Shore." Perhaps they meant the North Slope?

The photos show offshore rigs in Cook Inlet---an area that produces only a tiny amount of oil.

Most of the oil in Alaska comes from land based oil fields---not offshore as Duke University wrongly believes.

SHEESH!

"Its a brave new world"
---President Obama, 4/25/16
"Il bel far niente"
---traditional Italian saying
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Re: Market Power, Production (Mis)Allocation and OPEC

Unread postby Outcast_Searcher » Mon 11 Sep 2017, 13:24:59

Plantagenet wrote:More bone-headed errors occur in the panel describing Alaska.

There is no oil producing are in Alaska called the "North Shore." Perhaps they meant the North Slope?

The photos show offshore rigs in Cook Inlet---an area that produces only a tiny amount of oil.

Most of the oil in Alaska comes from land based oil fields---not offshore as Duke University wrongly believes.

SHEESH!

If people want to criticize much of the MSM, they don't have to look for dark widespread conspiracies. They can point to basic COMPETENCE -- almost every day, and certainly every week.

I'm sure I'm old fashioned, but I expect supposedly professional reporters (for the MSM articles I read) to have an excellent grasp on English. This would include things like grammar, spelling, using the correct word, being able to form a coherent sentence, etc. I also would expect them to have researched their subject matter, especially if somewhat technical, enough that they can at least get the vast majority of the BASIC facts correct. (i.e. have a clue what they're talking about).

Now, to me, the percentage of times supposedly top MSM media outlets (including newspapers, magazines, and TV, and of course internet reporting) let their customers down on these fronts is appalling. I realize of course, that cost cutting is partly responsible for this, but at what price?

(And I know Duke isn't the MSM, but they're supposedly a highly regarded major university -- which IMO should competently report a story, or should stop reporting. Oh, and if I can't trust their competence in basic reporting -- should I trust their analysis? Should I trust their conclusions? Especially if they likely have a political axe to grind re their economic viewpoint (as most of the MSM, both left and right wing, does?)
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