Tectonic Shift in Technology Shields Shale Boom from Falling Oil Prices

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Brent crude oil prices are down again today to a four year low. The rapid drop in oil prices was the inevitable result of the transformation of the energy industry. The transformation was so profound we called it a tectonic shift in our 2012 forecast. The U.S. has become the top producer of oil and the OPEC nations now account for only 40 percent of the world’s oil production. Investors may be worried that falling oil prices will derail the shale revolution. However, our second tectonic shift, technology, has become a shield against falling prices. Drilling technology has become far more productive lowering the breakeven price considerably. According to the Energy Department, only 4 percent of shale production in North Dakota, Texas and other states need an oil price above $80 a barrel for producers to see a profit on investments. These tectonic shifts in energy and technology are creating jobs paying higher than those in the service sector, benefitting U.S. economic growth. As companies scramble to find qualified workers in these fields they should note that military service and experience often dovetails nicely with the skills and knowledge required for technology oriented positions. Sincere thanks to all of our veterans for their service and sacrifice.

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