How Fracking Turned OPEC Into The Walking Dead

Great headline. 

Not sure about the conclusions though... Not that fracking is not an important game-changer. I just think the real victim of fracking marginal offshore production. Opec production is still very important as base-load. 

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OPEC, the oil weapon, the middle East... All of this is cold product, thanks to fracking. Get that price as low as possible and let's never talk about these things again, and if it's not enough, electrify all transportation and solarify all electricity generation, do everything that is needed so that we don't have to keep hearing about the Middle East every day in the news....

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1 hour ago, Rasmus Jorgensen said:

Great headline. 

Not sure about the conclusions though... Not that fracking is not an important game-changer. I just think the real victim of fracking marginal offshore production. Opec production is still very important as base-load. 

Yep, I agree.

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Wait a couple of years and you will see a very tight oil and gas market in next decade.

I agree with IEA or Art Berman that shale is rather retirement party than a final solution for growing global demand.

Big oil invest in new oil and gas production not enough money after 2014 so in a moment in not too distant future global economy will be even more dependent on OPEC than in the past before 2014

We are now probably excluding shale after non-Opec peak supply and in some moment in next decade we will feel that.

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16 hours ago, JunoTen said:

OPEC, the oil weapon, the middle East... All of this is cold product, thanks to fracking. Get that price as low as possible and let's never talk about these things again, and if it's not enough, electrify all transportation and solarify all electricity generation, do everything that is needed so that we don't have to keep hearing about the Middle East every day in the news....

Fracking and horizontal drilling have demonetized the Middle East to a great extent. They have had a population bomb going on since WW!. That is the real problem. Many Muslims now want to migrate all around the world.  The nations around the world, who allow them in will learn all about them up close.

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7 hours ago, Tomasz said:

Wait a couple of years and you will see a very tight oil and gas market in next decade.

I agree with IEA or Art Berman that shale is rather retirement party than a final solution for growing global demand.

Big oil invest in new oil and gas production not enough money after 2014 so in a moment in not too distant future global economy will be even more dependent on OPEC than in the past before 2014

We are now probably excluding shale after non-Opec peak supply and in some moment in next decade we will feel that.

Well, with shale oil seen to peak in just a few years, as per Wood Mac, we may be in for a tight oil market indeed.

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3 hours ago, ronwagn said:

Many Muslims now want to migrate all around the world.  The nations around the world, who allow them in will learn all about them up close.

In my experience they are just like everyone else. Most are very nice people and a few are not. Apart from having a slightly different super natural being, really no different to any other religious people or even those of us that don't go in for that sort of thing.

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50 minutes ago, DA? said:

Apart from having a slightly different super natural being, really no different to any other religious people or even those of us that don't go in for that sort of thing.

Please note that while I am not Muslim, I do live in a Muslim majority country.  While I cannot and will not speak on behalf of Muslims, I will point you to this Islamic site for you to re-consider your statement above.

THE BASICS OF THE POLITICAL SYSTEM IN ISLAM (PART 1 OF 2): ISLAM A TOTAL WAY OF LIFE

Introduction

The West makes a natural mistake in their understanding of Islamic tradition, assuming that religion means the same for Muslims as it has meant for most other religious adherents ever since the industrial revolution, and for some societies, even before that; that is: a section of life reserved for certain matters, and separate from other sections of life.  This is not the Islamic world view.  It never has been in the past, and modern attempts of making it so are seen as an aberration.

Islam: A Total Way of Life

Islam is a “total way of life.”  It has provided guidance in every sphere of life, from individual cleanliness, rules of trade, to the structure and politics of the society. Islam can never be separated from social, political, or economic life, since religion provides moral guidance for every action that a person takes.  The primary act of faith is to strive to implement God's will in both private and public life.  Muslims see that they, themselves, as well as the world around them, must be in total submission to God and his Will.  Moreover, they know that this concept of His rule must be established on earth in order to create a just society.  Like Jews and Christians before them, Muslims have been called into a covenant relationship with God, making them a community of believers who must serve as an example to other nations by creating a moral social order.  God tells the Muslim global nation:

“You are the best community raised for mankind, enjoining the right and forbidding the wrong…” (Quran 3:110)

Throughout history, being a Muslim has meant not only belonging to a religious community of fellow believers but also living under the Islamic Law.  For Islamic Law is believed to be an extension of God’s absolute sovereignty.

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53 minutes ago, Tom Kirkman said:

Please note that while I am not Muslim, I do live in a Muslim majority country.  While I cannot and will not speak on behalf of Muslims, I will point you to this Islamic site for you to re-consider your statement above.

THE BASICS OF THE POLITICAL SYSTEM IN ISLAM (PART 1 OF 2): ISLAM A TOTAL WAY OF LIFE

Introduction

The West makes a natural mistake in their understanding of Islamic tradition, assuming that religion means the same for Muslims as it has meant for most other religious adherents ever since the industrial revolution, and for some societies, even before that; that is: a section of life reserved for certain matters, and separate from other sections of life.  This is not the Islamic world view.  It never has been in the past, and modern attempts of making it so are seen as an aberration.

Islam: A Total Way of Life

Islam is a “total way of life.”  It has provided guidance in every sphere of life, from individual cleanliness, rules of trade, to the structure and politics of the society. Islam can never be separated from social, political, or economic life, since religion provides moral guidance for every action that a person takes.  The primary act of faith is to strive to implement God's will in both private and public life.  Muslims see that they, themselves, as well as the world around them, must be in total submission to God and his Will.  Moreover, they know that this concept of His rule must be established on earth in order to create a just society.  Like Jews and Christians before them, Muslims have been called into a covenant relationship with God, making them a community of believers who must serve as an example to other nations by creating a moral social order.  God tells the Muslim global nation:

“You are the best community raised for mankind, enjoining the right and forbidding the wrong…” (Quran 3:110)

Throughout history, being a Muslim has meant not only belonging to a religious community of fellow believers but also living under the Islamic Law.  For Islamic Law is believed to be an extension of God’s absolute sovereignty.

Yes and no. I've lived in and spent time in places (the three Judaism based ones)  where the people have been very religious and it does in some ways dictate their actions,  but in other ways not. It seems on the outside looking in every person interprets a religion in a different way. Then the religions are divided in to very different groups, although two people may call themselves Muslims their interpretations of it can be very different.

But what I was trying to say was people are people no matter what their believe system is. Most are basically good people trying to get by, they should never be judged just because they belong to one religion and not another. At one point I lived in Birmingham UK in a part of the town that was mainly Muslim, sharing a house with an English man that had parents that were Hindu and moved from India. All the neighbours got on far better than any other place I lived, no matter what the religion or colour. In fact it was brilliant as there always seemed to be some religious holiday or whatever going on and this normally involved lot's of food, which they often brought around for us to share. I never felt threatened in any way, the local park and along the canal where fine to walk along at night.

I do believe their are dangers in religious extremism but this comes in all religions and ideologies.

 

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17 hours ago, Marina Schwarz said:

Well, with shale oil seen to peak in just a few years, as per Wood Mac, we may be in for a tight oil market indeed.

It is a very big world. Fracking has barely been tried around the world. There are also many new or improved technologies every few years. 

What I see is increased market share for natural gas, which is undervalued, ethanol, solar, and wind. 

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13 hours ago, Tom Kirkman said:

Please note that while I am not Muslim, I do live in a Muslim majority country.  While I cannot and will not speak on behalf of Muslims, I will point you to this Islamic site for you to re-consider your statement above.

THE BASICS OF THE POLITICAL SYSTEM IN ISLAM (PART 1 OF 2): ISLAM A TOTAL WAY OF LIFE

Introduction

The West makes a natural mistake in their understanding of Islamic tradition, assuming that religion means the same for Muslims as it has meant for most other religious adherents ever since the industrial revolution, and for some societies, even before that; that is: a section of life reserved for certain matters, and separate from other sections of life.  This is not the Islamic world view.  It never has been in the past, and modern attempts of making it so are seen as an aberration.

Islam: A Total Way of Life

Islam is a “total way of life.”  It has provided guidance in every sphere of life, from individual cleanliness, rules of trade, to the structure and politics of the society. Islam can never be separated from social, political, or economic life, since religion provides moral guidance for every action that a person takes.  The primary act of faith is to strive to implement God's will in both private and public life.  Muslims see that they, themselves, as well as the world around them, must be in total submission to God and his Will.  Moreover, they know that this concept of His rule must be established on earth in order to create a just society.  Like Jews and Christians before them, Muslims have been called into a covenant relationship with God, making them a community of believers who must serve as an example to other nations by creating a moral social order.  God tells the Muslim global nation:

“You are the best community raised for mankind, enjoining the right and forbidding the wrong…” (Quran 3:110)

Throughout history, being a Muslim has meant not only belonging to a religious community of fellow believers but also living under the Islamic Law.  For Islamic Law is believed to be an extension of God’s absolute sovereignty.

There are many good Muslims and the majority are among them. Unfortunately, they are controlled by the extremists, at least in the Middle East. Presently China is taking very extreme measures to control them in China. 

https://www.independent.co.uk/news/world/asia/china-uighur-muslim-people-move-homes-xinjiang-china-religion-a8648561.html

One million Chinese people 'move into Muslim homes to report on Islamic or unpatriotic beliefs'

'Had a Uighur host just greeted a neighbour in Arabic with the words ‘Assalamu Alaykum’? That would need to go in the notebook," says Dr Darren Byler

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I have no issue with religion.  I'm simply trying to point out that Islam is a complete way of life as differentiated from the typical Western view of religion, which seems to be viewed mostly as spending an hour a week in church on Sunday.

Here in Malaysia, there used to be huge billboards that proudly proclaim "Islam is a way of life".  Although I haven't seen the billboards lately, no idea why.

 

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(edited)

29 minutes ago, Tom Kirkman said:

I have no issue with religion.  I'm simply trying to point out that Islam is a complete way of life as differentiated from the typical Western view of religion, which seems to be viewed mostly as spending an hour a week in church on Sunday.

Here in Malaysia, there used to be huge billboards that proudly proclaim "Islam is a way of life".  Although I haven't seen the billboards lately, no idea why.

 

My understanding is that Christianity has greatly declined in Europe while growing rapidly in the Third World. America has Christians of all levels. Many Christians are holiday church attendees or not attending at all but there are many dedicated and very good Christians who are evangelical and their religion is a major part of their life. The same is true around the world. 

Christianity has no modern record of violence except to protect its own. Muslims do have a modern record of violence in the name of their religion and throughout there entire history. Violence is a tenet of their faith. They even surpass atheistic communism in the number of murders worldwide. 

Muslim extremists have eradicated the mystics of Islam such as the Sufis, Whirling Dervishes, Yazidis etc. The violence between Sunni and Shia also continues. Turkey has gone from a secular democracy to a Muslim dictatorship which persecutes those who dare to follow a moderate leader who now lives in the United States.

Edited by ronwagn
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Probably not a good idea to slide this topic over into religion.  Too many lurkers and readers may have bad reactions.

Probably better to get this thread back on track about fracking and OPEC.  And the Walking Dead.  Zombies should be an integral part of this thread, as implied by @Marina Schwarz in the first comment.

1014_COMM_DeathMatch_featuredNEW.jpg

maxresdefault.thumb.jpg.34d82e6906c9014702cab0ae447fc10d.jpg

544be449dbf518e80a969c18db2674be.jpg.7133d06664ec3c37dfc35462f05efe07.jpg

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Yes! Custom zombies, I love the idea.

How did you guys go down the rabbit hole of religion? Didn't see it gaping open? Hehe.

4 hours ago, Tom Kirkman said:

I have no issue with religion.  I'm simply trying to point out that Islam is a complete way of life as differentiated from the typical Western view of religion, which seems to be viewed mostly as spending an hour a week in church on Sunday.

Yes.

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(edited)

Many of the companies are almost pyramid schemes - the wells have short lifespans so you always need to be drilling new wells; if for any reason new drilling stops the companies could be in big trouble fast.

Edited by Enthalpic

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9 hours ago, Tom Kirkman said:

I have no issue with religion.  I'm simply trying to point out that Islam is a complete way of life as differentiated from the typical Western view of religion, which seems to be viewed mostly as spending an hour a week in church on Sunday.

Here in Malaysia, there used to be huge billboards that proudly proclaim "Islam is a way of life".  Although I haven't seen the billboards lately, no idea why.

 

see the link I posted to an interview with a homosexuel imam under @Marina Schwarzs blogpost- Islam can evolve too. But lets keep that there and get back to fracking. 

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On 11/24/2018 at 6:05 PM, Marina Schwarz said:

How Fracking Turned OPEC Into The Walking Dead

I just loved this headline. Can't blame me.

perhaps rumors of OPEC death are greatly exaggerated?:)

US shale industry is a serious thread - primarily to the health of US economy. Not only it is marginally unprofitable (with very few exceptions) but amassed substantial debt which deleveraging will have domino effect on financial sector. Not to mention losses and devastation of individual investors (hardly unique issue; debt in auto loans, real estate and student loans are much much worse).

I see rise of LTO production as a springboard for oil prices. Only need to look at one chart to understand why: https://shaleprofile.com/2018/11/12/us-update-through-july-2018/

 

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On 11/24/2018 at 6:09 AM, Rasmus Jorgensen said:

Great headline. 

Not sure about the conclusions though... Not that fracking is not an important game-changer. I just think the real victim of fracking marginal offshore production. Opec production is still very important as base-load. 

 

On 11/24/2018 at 6:12 AM, JunoTen said:

OPEC, the oil weapon, the middle East... All of this is cold product, thanks to fracking. Get that price as low as possible and let's never talk about these things again, and if it's not enough, electrify all transportation and solarify all electricity generation, do everything that is needed so that we don't have to keep hearing about the Middle East every day in the news....

European oil demand is already declining, the US is very near its peak if it hasn't already, China has fast-tracked electrification, and SE Asia will likely do the same.  I'd argue demand decline in these nations is what matters and that decline is inevitable.  

The US alone spends $80-90bn/year stabilizing the Middle East.  Once both we and Russia are oil exporters, I imagine we'll collectively have an incentive to dismantle Middle East oil production - or at the very least, let them fight themselves (as they always do) and profit from selling weapons.  We could watch their foreign reserves & production slowly decline and, once the world is completely weaned off them, leave them as they were before oil: irrelevant.  

Or at least, after decades of wasted blood & treasure dealing with their BS, that's how I would play it. 

 

On 11/25/2018 at 1:53 AM, DA? said:

In my experience they are just like everyone else. Most are very nice people and a few are not. Apart from having a slightly different super natural being, really no different to any other religious people or even those of us that don't go in for that sort of thing.

 

On 11/25/2018 at 4:54 PM, ronwagn said:

There are many good Muslims and the majority are among them. Unfortunately, they are controlled by the extremists, at least in the Middle East. Presently China is taking very extreme measures to control them in China. 

https://www.independent.co.uk/news/world/asia/china-uighur-muslim-people-move-homes-xinjiang-china-religion-a8648561.html

One million Chinese people 'move into Muslim homes to report on Islamic or unpatriotic beliefs'

'Had a Uighur host just greeted a neighbour in Arabic with the words ‘Assalamu Alaykum’? That would need to go in the notebook," says Dr Darren Byler

Fine.  I'll be the politically incorrect one.  

How people behave when they're weak is very different from how they behave when they believe they're powerful.  This is true of all human beings.  

Islam is, in fact, a way of life and it is, in fact, a rather violent, oppressive way of life - when it can get away with it.  In Europe and the US, Islam is still too weak to threaten anyone.  Allow enough of them in, however, and they'll do to your culture what they did to the North African & Middle Eastern Christian communities: threaten, oppress, and kill you until you're practically extinct.  

You might argue that that was just the initial Islamic expansion, but Islamic violence is consistent throughout history.  After it became clear they wouldn't stop invading Europe, Christianity organized several crusades to oppose them.  In the modern world, you'll notice the high frequency with which the existence of Muslim majorities and introduction of Islamic populations to other cultures results in violence.  The correlation is strong enough to raise questions.  

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On 11/24/2018 at 1:09 PM, Rasmus Jorgensen said:

Great headline. 

Not sure about the conclusions though... Not that fracking is not an important game-changer. I just think the real victim of fracking marginal offshore production. Opec production is still very important as base-load. 

Yes you right OPEC's production is very much important and will always have a direct influence on price. 

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On 11/25/2018 at 5:31 AM, ronwagn said:

Fracking and horizontal drilling have demonetized the Middle East to a great extent. They have had a population bomb going on since WW!. That is the real problem. Many Muslims now want to migrate all around the world.  The nations around the world, who allow them in will learn all about them up close.

Well said but don't forget Oil at low prices isn't a good base for shale. Oil at $40 dollars will affect drillers in the US. I feel Trump is playing the middle east with a negotiation strategy supporting lower oil prices but clearly knows the ME wants prices above $60/b to support their economies. Oil at any price is in Russia's advantage too. Unfortunately it's just the economics of oil. 

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(edited)

9 hours ago, mthebold said:

European oil demand is already declining, the US is very near its peak if it hasn't already, China has fast-tracked electrification, and SE Asia will likely do the same.  I'd argue demand decline in these nations is what matters and that decline is inevitable.  

The US alone spends $80-90bn/year stabilizing the Middle East.  Once both we and Russia are oil exporters, I imagine we'll collectively have an incentive to dismantle Middle East oil production - or at the very least, let them fight themselves (as they always do) and profit from selling weapons.  We could watch their foreign reserves & production slowly decline and, once the world is completely weaned off them, leave them as they were before oil: irrelevant.  

Or at least, after decades of wasted blood & treasure dealing with their BS, that's how I would play it. 

I think you are missing the point on this one. It is supply and demand. Plain and simple. if the ME imploded today it would take far too long to replace their production either by alternative sources or other production. Oil prices would go not nuts and Trump could tweet all he wanted - it wouldn't matter the least.

This is about real-life practicalities. 

ps. I am not saying that the US needs to stay in the ME. I am just saying that the baseload of oil that the ME is supplying would take a seriously long time replacing. Ask anybody here. 

Edited by Rasmus Jorgensen
typo
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4 hours ago, Rasmus Jorgensen said:

I think you are missing the point on this one. It is supply and demand. Plain and simple. if the ME imploded today it would take far too long to replace their production either by alternative sources or other production. Oil prices would go not nuts and Trump could tweet all he wanted - it wouldn't matter the least.

This is about real-life practicalities. 

ps. I am not saying that the US needs to stay in the ME. I am just saying that the baseload of oil that the ME is supplying would take a seriously long time replacing. Ask anybody here. 

The implosion won't be immediate though.  Some precedents:

- Both Iran and Iraq continued producing during their protracted war in the 1980's.  
- Venezuelan production has declined somewhat gracefully over several years
- Libyan production is off-and-on, but the long-term trend is fewer companies willing to do business with them. 
- The Iran sanctions have shown that we can decrease a country's production - or at least their revenue - within some range as it pleases us.

We're accustomed to thinking of the Middle East as a monolithic block because of OPEC's historical pricing power.  In the past, we believed they could drive the price to $200, and there's nothing anyone could do about it.  In reality, demand destruction has been swift and brutal after every price spike (which is why they brought prices back down), but we believed they had power.  The world no longer believes that.  At $100/bbl, the world could produce all the oil it needed even without the Middle East, which caps the long-term price of oil.  They could spike prices temporarily, but only at the cost of their own destruction.  Put simply, the next time they get cheeky will be their undoing - assuming they aren't screwed already.  

So the precedents say a Middle East implosion would actually be a protracted decline with occasional step changes, and the world no longer believes OPEC has pricing power.  How quickly could we replace them?  In the trailing 12 months, the US increased oil production 3MMbpd.  That was with prices <=$80/bbl, bottlenecks lowering wellhead prices more than $10/bbl below global prices, and many of the drilled wells left uncompleted.  3MMbpd in the US alone under bad conditions.  Now add these factors: 

- Electrification, while currently small, will take off in the next few years regardless of oil prices
- Waste/biomass-to-coal is about to spread regardless of oil prices
- Natural gas vehicle uptake would increase
- Above $100/bbl, coal-to-oil would become a real possibility
- High prices would slow demand in developing countries
- Some consumers would adjust driving behavior
- Some consumers would begin switching to more efficient vehicles
- Some consumers would find alternatives to vehicles (bicycles, public transit, living closer to work)
- OEM adoption of efficiency technology in new vehicles would accelerate
- Canada might get serious about oil pipelines and increasing oil sand production (notice they're currently not even trying)
- The rest of the world - accounting for the other half of global oil supply - would increase production.  

If you don't believe the demand destruction part, look at the global decline in oil consumption during the 1970's oil crises  Back then, we had far fewer options, and the pace of destruction still scared the hell out of OPEC:

Image result for global oil demand

If the world were so inclined, it could replace the Middle East in a decade or two.  $100/bbl oil would be sufficient to spark that inclination.  

 

In conclusion, our current situation is: 
- OPEC's pricing power and global influence are gone.  There's nothing they can do to us that won't trigger their own destruction.
- A Middle East "implosion" would actually be a protracted decline with occasional step changes.
- We have a plethora of options for dealing with an "implosion" and could certainly keep up with their decline.

That said, my observation is that once the US and Russia are both exporters, it will be in our financial interest to pick off Middle Eastern countries one by one as demand destruction and our own production replace their supply.  It may even be in our financial interest to spike prices and hasten their impending doom.  

Whatever happens, I don't think the Middle East will be the last man standing in the oil industry.  Oil is the only thing of value they offer the world, ensuring they provide it is an expensive headache, and we now have alternatives.  We need not tolerate their dickery any longer.  

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20 hours ago, GHOMORAIE said:

Well said but don't forget Oil at low prices isn't a good base for shale. Oil at $40 dollars will affect drillers in the US. I feel Trump is playing the middle east with a negotiation strategy supporting lower oil prices but clearly knows the ME wants prices above $60/b to support their economies. Oil at any price is in Russia's advantage too. Unfortunately, it's just the economics of oil. 

 

 

The countries that will suffer from low oil prices are those countries that are not dependent on oil profits as an overly large portion of their gross national product. Those that use their own oil will benefit the most. 

Here are the largest producers https://en.wikipedia.org/wiki/List_of_countries_by_oil_production

Countries by Gross National Product https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

Countries with the highest oil consumption https://en.wikipedia.org/wiki/List_of_countries_by_oil_consumption

Russia is overly dependent on oil sales profits as is the Middle East, some nations in Africa etc. All of these countries economies suffer greatly when they do not sell their oil and associated natural gas for a good profit and in sufficient quantity. They are also all in competition with one another. America has basically removed itself from the position of needing to import oil except from Canada and is now a net exporter.

I believe that hydrofracking and horizontal drilling together with other technological improvements will lead to many more finds and much more production of oil and associated natural gas. We are also a net exporter of natural gas, technology, equipment, and personnel. 

The Russian economy is now just slightly ahead of Australia and Spain. It will continue to slide IMHO. Its secondary export is weaponry. Much of it is high tech, but the world is glutted with most other armaments already. The climates of Russia and the Middle East make it difficult to produce agricultural products and are largely uninhabitable. Fortunately,  Russia and the Middle East have fairly good educational systems and will figure out a way to survive. Europe will benefit from low cost oil and natural gas as will China and India. They do not have enough of their own. 

 

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