Contrasting Views on Future of Shale Revolution

Analysts at BOA / Merrill Lynch predict a continuing rise in North American shale oil production, with a steady downward pressure on oil prices. That comes from the BOA/ML 2013 Energy Outlook.

The CEO of engineering & construction giant Fluor Corp. says that the continuing bonanza of shale gas in North America will fuel a huge resurgence in manufacturing and chemicals.

In Mexico, a potentially significant rise in shale production awaits political decisions by the new president.

Meanwhile in Russia, doubts about how long the bear can keep producing its oil at current levels. If Russia learns to exploit its own giant shale resources, it should be able to extend its energy winning streak by a matter of decades.

Meanwhile, large numbers of doomers are predicting that the North American shale bonanza will come to an abrupt end any day now.

Economist James Hamilton is predicting an end to current rising trends in production of shale oils in North America within 10 years.

Hamilton's prediction is incomplete, however, since he fails to explicitly state what he sees happening for the next several years after shale production tops, and levels off.

Peak oilers are famous for predicting production peaks which look like an actual mountain peak -- picture the Matterhorn, for example. But even the poster boy peak of oil production -- continental US production -- stops looking like a sharp peak if you step back in time and look at the big picture, still being painted.

Looking at North America as a whole, Al Fin shale oil analysts picture a 10 year ramp up, followed by a roughly 10 year undulating plateau, followed by a gradual decline in North American shale production. The decline will occur for many reasons, including rising prices of production -- and decreased demand for crude in the face of an explosion of cheaper substitutes beginning in the mid 2020s.

Much depends upon whether US President Obama allows the anti-energy ideologues in his administration to place an overburden of expensive and restrictive regulation on top of the costs of production of shale oil & gas. Will he let slip the dogs of his war against energy? Or will he relent, and attempt to nurture a stronger US economy in his second and final term?