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Liam Denning

Oil's Next Great Deflationary Force: Taxes

Countries are starting to compete to attract investment.

Costs are going down too.

Costs are going down too.

Photographer: Getty Images/Hulton Archive

In a commodity business, cost is king. The efficient producer ultimately wins more business and more investment – and that is as true for countries as it is for companies.

The shale boom, along with slowing energy demand growth in much of the industrialized world, has changed the global oil and gas business. Rising productivity in areas such as the Permian and Appalachian basins has been a deflationary force rippling out across the industry, forcing producers everywhere from Canada’s oil sands to Brazil’s deepwater fields to cut costs.