BP's chief economist on ‘New economics of oil’
“The emergence of shale oil, together with growing concerns about climate change and the environment, means that the beliefs that many of us have used in the past to analyse the oil market are out of date. We need a new toolkit, a new set of principles, to guide our analysis of the oil market.” - Spencer Dale
BP’s group chief economist Spencer Dale has been explaining how the ‘shale revolution’ and concerns over climate change have changed the economics of the oil industry for good at the Society of Business Economists annual conference in London.
In his speech, 'New economics of oil', he argues that shale has changed the principles needed to understand the market because of factors such as shorter lead times, greater exposure to financial markets and its use of manufacturing-like processes.
Meanwhile, Dale argues that the pace at which oil reserves are increasing, coupled with concerns over climate change, mean that the world’s reserves of oil are likely to never be exhausted, challenging the conventional view that its price would rise with increasing scarcity.