And big: we may shortly have seen a 50% price reduction in a matter of months. Gas and coal will follow oil down, if not maybe in quite that degree. CU listed a few of the losers from all this, but I want to add a couple of riders.
- ISIS. Yes, they have a little oil racket going on. But the whole Arab Spring thing was kicked off by poverty and I'd say they will be quite happy, on balance, to trade oil revenues for increasingly discontented arab populations from Algeria to Iraq.
- Shale. Yup, revenues down for shale producers as well, BUT let no one forget the power of Sunk Costs, one of, if not the the most critical dynamics in capital-intensive industries. Hey, you've invested the capital, you have debt to service, your marginal costs are (relatively) tiny, and you have to choose: diappointing revenues or no revenues ? This is not a decision that will trouble the board for very long this Monday morning.