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OPEC's End May Be Closer Than Imagined, Even Without Iran

That's no longer the case, so America enjoys a wide enough price spread that it makes sense to export refined fuel products at record levels. Africa, Asia, and Latin America including Venezuela are American refined product customers. America's exporting advantage should remain in place as long as WTI remains a bargain compared to Brent. Planned and or actual production increases are occurring in non-OPEC countries all over the world.

Mexico is considering an end to state owned Pemex's oil production monopoly. Pemex production peaked in 2004 and declined by more than 20%. Changes allowing private industry to compete require a constitutional change, which in turn requires a two-thirds majority in Congress. Far from an immediate done deal, however, it appears to me that changes are more likely when not if. As annual production falls, a market based solution becomes clearer.

No conversation about world energy markets is complete without discussing the Middle Kingdom. China's voracious and growing energy appetite is offset by proven reserves. China's shale gas reserves are the largest in the world. Getting the energy out of the ground is another matter though. Much like the Bakken formation in North Dakota, China's rich shale deposits are even more removed from infrastructure and transportation networks. Those companies include: China Petrochemical (SNP), PetroChina Co. (PTR), Chevron (CVX), and others.

China has made it a priority to develop domestic energy production to lessen dependency on imports. Once China begins producing faster than consuming, it is then a game set match for OPEC -- as far as dictating world production and prices.

For consumers and the world economy, it's an extraordinary thing. Lower energy prices result in higher standards of living; more people will be lifted out of poverty; increased local production-consumption creates greater efficiency and diminishes the need to protect oil tanker sea lanes.

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