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There is a mixed picture behind the drop in investment in new oil exploration. The IEA estimates that overall investment will be down 15-20% in 2009. The number of drilling rigs in use globally fell 32% in the year to April 2009, to 2055, according to Baker-Hughes, an oilfield services firm. In America the number of rigs in use is down by 50%, and OPEC countries are cancelling 35 big projects, according to the OPEC secretary general, Salem Al-Badri. Cambridge Energy Associates estimates that 5.5 million barrels a day of capacity additions may not take place in the next couple of years, which is a third of expected net increase by 2014. Examine this a bit more closely and you find that the oil majors despite lack of access to oil in inhospitable terrain or foreign countries, are still holding up well in investment. Exxon increased capital spending by 5% in the 1st quarter 2009, and Shell and Chevron plan to invest the same in 2009 as in 2008, $31 billion and $23 billion. BP plans to go from $21 billion to $20 billion. Canadian Tar Sands investments are being reevaluated in the light of prices, and smaller companies like Devon Energy are cutting back, for Devon from $9 billion in 2008 to $4 billion in 2009. From the national oil companies the investments are holding up in Saudi Arabia, whereas they are faltering in Russia and cash strapped Venezuela. Saudi Aramco recently completed a 5 year project increasing capacity from 10m b/d to 12.5 b/d at cost of $70 billion. And another $60 billion is set aside for more investments which will be less vigorously pursued as Saudis have 4.5m b/d of idle capacity after production cutbacks by OPEC. Petrobras plans to increase its investment by 55% to $174 billion in the next 5 years in offshore discoveries challenged by deep waters and thick layers of salt. The oilfield services companies like Schlumberger are cutting back, with Schlumberger cutting investment in 2009 by 13% to $2.6 billion and shedding 5000 jobs. Baker Hughes shed 3000 jobs. Mature fields are also receiving less investment, so that the drop from mature fields will be 9.4% according to IEA instead of 7.7% projected earlier with larger investments. The picture described above shows investments by the Saudis, the majors, oil field services firms, investments in recovery improvements in mature fields, not in a precipitious decline. The picture is of cautious and careful investment and some pullbacks as the economies of the US suffered decline in GDP of 6% in the 1st quarter 2009 over prior year and the German and Japanese economies suffered decline of 15-16%. Even the most optimistic forecasts for China do not go above 8% for 2009. In the light of these growth estimates the moderate drop in investments in new oil exploration may match the moderation in growth in Asia and the drop in growth in the USA and Europe and Japan. The forecasts of steeply higher oil prices or spikes like those in 2007-2008 are based on the notion of a quick economic recovery. See the links to economic recovery on this. These links suggest that the current surge may not last as the basics for a recovery are weak. In the US foreclosures, toxic assets, housing, consumption and savings, and unemployment all indicate a weak economy for several years down the road. And it is this weakness that the oil investment exploration budgets may be responding to in amoderated manner. The latest sign of this weakness is the spread of foreclosures to prime borrowers with job losses, link NYT May 24, 2009. The Saudi king thinks that $75 is a fair price for oil. Current prices have taken oil to $60 a barrel, even as inventories remain strong with over 60 days of supply. No spikes like those in the past are realistic in this economic environment....

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GDP expanded at 3.5% in the fourth quarter of 2016, according to the Turkey Statistics Office. This follows a contraction by 1.8% in the third quarter of 2016. For the full year the GDP growth is 2.9 percent, a decline from the 6.1% in 2015. In 2015 Turkey gained from lower oil prices. This was offset in 2016 by the politics in the region- the increased instability in the country following a crackdown on the opposition and media, internal conflict in the Kurdish region which appeared for a time to be leading to peaceful settlement. As a result tourism revenues declined by 30% and this was offset by increased government spending. The uncertainty before the referendum also leads to decline in foreign investment and investment by domestic firms.

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Greg Ip points out that Saudi Arabia's effort to get back market share is not working so far as shale oil producers continue to increase production. OPEC now confronts a very different competitor in the U.S. shale oil industry- 77 different producers produce 75% of American oil production, each acting like a tech startup, with access to capital markets which are continuing to provide capital. These producers can increase or reduce production with agility, and act differently from state owned oil producers or the major western oil companies. He cites Goldman Sachs figures showing average rig in Texas Eagle Ford shale yielding 5000 barrels a day in the first year compared to 2000 barrels in 2011. This analysis also shows shale oil production cost on a declining curve- $80 in 2014 and $60 in 2015, which could upset Saudi calculations with the advances in technology. Majors such as ExxonMobil are also moving forward with the technological advances.

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Sharp drop in oil prices in Dec. 2015.

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The ruble goes from a low of 80 to the dollar in Dec. 2014 to 50 to the dollar by May 2015. The euro also strengthens against the dollar with weakening economic conditions in the U.S. leading to a reversal in the strength of the dollar.

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This editorial in the Economist says China faces risks of a steep fall in the currency in its management of the currency. It suggests temporarily using capital controls to stabilize the currency and later gradually lift the controls. In any case it says the exercize will not be painless because of high debt of companies and in the Chinese economy.

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Under a new agreement reached between the new Iraqi government of prime minister Haider al-Abadi and the semi-autonomous region of Kurdistan, Kurdistan will export 250,000 barrels of oil a day in 2015, and the province of Kirkuk will export 300,000 barrels a day. Exports will be made under the Iraq national oil company, SOMO (State Organization for Marketing of Oil). Kurdistan will get 17% of Iraq's budget expenditure, Kurds will sit on the SOMO board, and Kurdish Peshmerga army will get direct monthly payments from Iraq's budget. Earlier in 2014 talks had broken down under the Maliki government- Kurdistan began exports using a pipeline to Turkey and the Iraqi government cut off budget payments to the Kurdistan Regional Government. Iraq's oil minister Abdul-Mehdi said in Vienna after an OPEC meeting in November that Iraq has set a production target of 3.8 million barrels a day for 2015. This is an increase of 500,000 barrels a day compared to production in Oct. 2014.

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The decline in fertility rates in Brazil from 6.1 children per woman in 1960, to less than 1.9 children per woman in 2010, has astounded experts. Especially because this is observed in all parts of Brazil, in poor and affluent areas. The tend is observed throughout Latin America, from Chile and Mexico to Ecuador. The fertility rate in Latin America has declined sharply from about 6 children per woman in 1960, to 2.3 in 2010. The rate in the U.S. is 2.0, which is enough to keep the population at a level where it remains stable.

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Questions about the viability of Canadian crude oil production from tar sands and shale as oil prices for Canadian crude are at about $17 in Jan. 2016. Western Canadian Select from Alberta traded at about $14 in Jan 2016. Crude oil NY benchmark is at $31, other crude is priced lower if transportation costs and other factors including quality and grade have to be figured in.

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The WSJ's Spencer Jakab points out the role of politics- with Saudi Arabia in a standoff with Iran and Russia in Middle Eastern conflicts- and Saudi policy of full output with no cuts unlikely to change, ensuring lower prices for 2016-2017.

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The market for copper experienced a global oversupply in the last 4 years with a sharp decline in prices. The Sierra Gorda mine in Chile and the Constancia mine in Peru will add more supply of copper. Prices of iron ore dropped 50% in 2014, and copper 14%. The CEO of Glencore PLC, Ivan Glasenberg, says the problem is a huge misallocation of capital, as companies in the mining business continued to invest heavily with supplies outstripping demand.

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Government GDP figures show the GDP shrank by 1.8% in the third quarter of 2016 compared to the same period in 2015, the first such contraction in the economy since 2009. Household consumption was down 3.2%. The sharp decline in the value of the lira by 20% in 2016 makes imports costlier, in an economy dependent on consumption spending and tourism for higher GDP growth. Political uncertainty with instability in Turkey following a crackdown on opposition and media also leads to decline in foreign investment and investment by domestic firms.

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India's demographics show one startling fact. By 2020, the average age of Indians will be 29. This is happening just as the rest of the world is aging very fast. In the next 15 years India will have 130 million more people in the 20 to 49 age group. This compares with a shrinking in population of 100 million in that age group in developed countries and China, according to the U.N. Population Division. The problem facing India is malnutrition that runs as high as 43% for children with half the mothers anemic, weak educational system at the primary and secondary school levels especially in the government run schools, lack of good governance in the most populated states such as Uttar Pradesh in the Ganges plains which has 200 million people, the consequent overburdening of cities which have no plans to manage the migration of the rural poor to the cities. India has to find ways to fill the huge gaps in getting better nutrition, education, dignity and sense of opportunity, and work for the growing numbers....