The Rising Influence of Rising Affluence

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....There has been a lot of speculation about which countries are the intended target of Saudi Arabia's and Opec's decision to maintain output, allow prices to fall, and curb high-cost production. US shale producers (authors of the shale revolution), Russia (for geopolitical reasons), and Venezuela (also for geopolitical reasons) have all been mentioned. But Saudi and Opec officials have been careful to say their target is to restrain "high-cost" production rather than shale. Shale is mid-cost production, at least in the most prolific and well-understood plays like Bakken, Eagle Ford and Permian. In any event, Saudi Arabia and Opec cannot target any particular group of producers. The pain of low prices is widespread. Opec has no control over who buckles first. By increasing their efficiency, shale producers have pushed more of the adjustment onto non- Opec non-shale producers (NONS) in the North Sea, the Arctic, deepwater, megaprojects and frontier areas, as well as weaker members of Opec in Latin America and Africa....