Since 2010 US has had about 20,000 new shale wells, ten times more, than Saudi Arabia has. The shale companies already know where big hydrocarbon resources are located and are ready to quickly start drilling. This business looks more like production of beverages: as soon as the world is thirsty, the new plant producing beverages opens.
Since this summer oil price reduced by almost 40%. However, the main culprits of the crisis are oilmen of North Dakota and Texas. The past four years (while the prices were $110) they have been increasing oil production from shale beds. Since 2010 they have drilled about 20,000 new wells and increased oil production in the US by one third or up to 9 million barrels a day. This is only 1 million less, than produced by Saudi Arabia.
The competition between the shale oilmen and sheikhs has led to excess of oil.
However, cheaper oil must become a shot of adrenalin for the world economy. Reduction of the oil price by $40.00 will allow transferring about $1.3 trillion from oil makers to the consumers’ pockets. Average US motor-car enthusiast, who has spent $3000 for petrol in 2013, will be able to save $800 this year (equivalent to rise in salary by 2%).
Big importers, such as European countries, India, Japan and Turkey, are very happy with slump of oil prices. Saved money will be spent, but not transferred to the Sovereign Fund, and then global GDP must sharply increase.
The reduced oil prices will lower inflation, which will force the central banks to temper monetary policy.
However, in general economic effect of the cheaper oil is rather positive, than negative, writes The Economist.
