Eoin Treacy's view -
Quick thought, following your comment on America's oil glut, and Morgan Stanley's report you highlighted.
I have been watching the difference in price between the WTI and Brent Crude for a long time now. The difference seems to vary between 10 and almost 20% depending on the day, with WTI obviously being the cheaper. Is it too SIMPLISTIC to say?
1) that US factories, offices, homes etc enjoy an enormous advantage over their global competitors with Energy costs being so much cheaper, not forgetting it already enjoys a significant tax advantage over many as well.
2) when the US does become a significant oil exporter, it can make a lot of profit, even by offering only minor discounts to the Brent price to attract business. Possibly more profit than from its LNG exports.
Thank you for highlighting these points. I’ve always been a fan of Ockham’s Razor. There is no need to get over complicated. The USA has a massive advantage in terms of its oil and gas production capacity. That is reshaping global geopolitics, it will have a meaningful effect on the balance of payments and it has already had a meaningful effect on the chemical industry because of reduced input costs. one.
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