Deemed one of the most-well-funded terrorist networks, the Islamist State in Syria and Iraq is reportedly making millions of dollars daily from smuggling, stealing, refining and selling oil. Completely shutting down their vast operation appears unlikely according to expert consensus. “When Islamic State fighters stormed across the Syrian border into Iraq and seized Mosul, a city of 2 million, back in June, they arrived in Toyota pickup trucks and dusty sedans. A fleet of oil tankers was also part of the convoy. The group was coming for the oil.” [NPR]
The Council on Foreign Relations’ Michael Levi deconstructed a US oil export argument recently made by New York Times columnist Tom Friedman. Levi contends the downward price pressure US oil exports would cause has been greatly exaggerated. “But now stop for a moment: We are predicting a world in which oil production is lower and oil prices have also dropped. This makes zero sense: less oil production results in higher prices – not lower ones. Friedman’s claim about oil exports and oil prices quickly leads to a logical impossibility. The only possible conclusion is that Friedman is wrong.” [CFR]
The EIA yesterday released its “International Energy Outlook 2014,” which focuses on petroleum and other liquids and the Agency projects oil prices will decline over the medium term and then steadily increase out to 2040 (reference case). “In the IEO2014 Reference case, world oil prices fall from $113 per barrel (2012 dollars) in 2011 to $92 per barrel in 2017, then rise steadily to $141 per barrel in 2040. …The largest new supplies of tight oil come from the United States, although a few other countries, including Canada, Mexico, Russia, Argentina, and China, also begin producing substantial volumes of tight oil in the Reference case (Figure 2). In addition, IEO2014 assumes that the OPEC countries will choose to maintain their market share of world liquid fuels production, and as a result, they will schedule investments in incremental production capacity so that total OPEC liquid fuels production represents between 39% and 44% of the world total throughout the projection.” [EIA]
