About a year ago, Joe Weisenthal and I started a podcast called Odd Lots, a reference to atypical trade sizes and also an indication of what we hoped would be a whole bunch of unusual subject matter. This week we published our 50th episode and I believe we’ve kept our promise.
We’ve covered everything from the evolution of bananas, to psychoanalytic philosophy, Seinfeld economics, and pirate insurance, to a Middle East highway and country music – all with a markets angle of course! Along the way, we’ve also discussed more traditional financial topics such as the 2008 crisis, ponzi schemes, oodles on market structure, central bank stimulus, exchange-traded funds, bubbles and shadow banks.
Despite this grab bag of subjects and a sometimes esoteric bent, we’ve consistently made it into the top 10 ‘Business News’ podcasts on iTunes – not least thanks to our amazing producers, Magnus Henrikkson, Sara Patterson and Alec McCabe. Here’s to another 50 episodes.
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This story is about oil drilling components.
More than that, however, it’s about how energy companies are trimming the fat in some of the most basic ways possible – by standardising subsea drilling components, engineering contracts, even light bulbs. It’s at once an indictment of the oil industry, and the amount of fat that still has left to be trimmed after a period of excess, and an illustration of the degree to which technological revolution beyond shale drilling is now bringing down costs – in some cases by as much as two thirds.
… While the specs for Norwegian Sea drilling might provoke reactions akin to the oil field’s name—the Snorre—such standardized pipes and casings could hold the key to a pervasive mystery about today’s energy market: Why is everyone still drilling when prices are in the basement?
Even as oil producers have planned $1 trillion worth of spending reductions between 2015-to-2020—cutting staff, delaying projects, and squeezing contractors—they’ve continued to green-light new wells from the Norwegian Sea to Brazil, and from Uganda to the Gulf of Mexico. Those initiatives mean oil production will continue to grow, adding to the supply glut and putting downward pressure on prices.
It’s a development that has both baffled and frustrated the world’s biggest producers of crude, who have been waiting for lower prices to force a rollback of global production. They have largely blamed the resilience of the world’s oil drilling on U.S. shale producers
, as well as efforts to maintain market share, but the Snorre
and other projects like it suggest there may be another–much more boring–culprit at fault …
Read the rest of ‘How Actual Nuts and Bolts Are Bringing Down Oil Prices’ over here.