“Royalties.” That sounds so . . . Saudi.
Steep wall on the right.....
But shutting down shale/fracking wells is easy and no future production is lost. Unlike the Saudi oil wells if they turn those off they lose future production because the well loses production capability due to the pressure decreasing.
So with Shale we can just cap it and come back when the price is right again. Meanwhile we get cheap Saudi oil and when it gets too high we turn on the fracking wells and keep the cost reasonable :-)
bfl
OPEN would be illegal in the USA
Price fixing is their only reason for existing
It’s worse than a monopoly.
Liberal elites are horrified.
Teeming masses take to the roads to spew evil carbon!
Pickup and SUV sales soar.
God bless America!
We the people will get screwed in the end because the ruling class sees an opportunity in lower gas prices they just will not be able to resist, higher taxes.
Just watch.
Simple solution is to mandate preference for domestic producers when price level approaches domestic cash cost. In other words even if OPEC crude is offered in Houston at $25 per bbl, restrict it in favor of domestic crude at $35. The consumer won’t suffer much but OPEC sure will.
And right now OPEC led by Saudi Arabia is looking to drive domestic producers out of business in a price war.
And are such restrictions fair? Considering that most global oil producers do the same, then yes.
The issue is less about the price of oil but rather the dependency of each of these countries on that oil revenue. The Saudis and other Middle East countries have avoided the dreaded ISIS-like uprisings largely because they have increased social spending to placate the masses. Without expensive oil there is less money to spend on these social programs and that opens the regimes to increased political upheaval. Similar issue in Russia and Venezuela where oil income is one of the few things keeping the corrupt economy afloat.
Meanwhile, in the US, we are significantly less dependent on oil income as it is a much smaller share of our total GDP. The CEO of Exxon, in a recent article, said they have modeled how to be a profitable company even with $40 oil.
What is the horizontal axis in that graph?
OK I see what it is now.
What is wrong with lower prices? What is right about higher prices? Do most people go looking for the highest priced items?