Wednesday, November 30, 2016

Shale producers keep the dollar up

Shale producers know the score, and they are using technology and automation. OPEC is an attempted price fixer, so we have a dual equilibrium.  It is shale on/off, the US is the marginal producer, the super pricing power.

Shale oil production, in Texas and North Dakota is what drove employment for many early years of the cycle since 2008.

What does this tell us about productivity?

We are productive when we can close the loop.  The dual equilibrium is a redundant loop, a bulge that rolls between OPEC and American shale.  Shale producers can run the loop efficiently, effectively closing it.   They have the stats on that loop nailed, so Ito is happy and shale folks can do smooth math

Your X axis is reasonable enough to get on a bankers curve, it mostly properly indexes events as smoothly as any other X axis, the shale guys are now running in Amber, usingh Nick's Red/Green scale.

They can treat their supply can delivery chain as a compressible fluid in the model. That makes their balance sheet stable, it is not constantly re-quantized. A stable probability graph more precisely predicts the flow of goodies, and that is wealth.

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