Posted on 12/08/2014 9:12:53 PM PST by Maelstorm
The conventional wisdom has it that many U.S. oil producers can’t make money with oil prices below $85 a barrel. Here’s why the experts may be wrong.
For U.S. consumers, there’s plenty to like about plummeting oil prices. After all, the cost of gasoline and home heating oil is falling dramatically as well. Since June, the price of WTI crude has dropped from about $101 a barrel to a recent price of $65, or roughly a 35% decline. And the average price of a gallon of unleaded gasoline in the U.S. has plunged to $2.76 from $3.27 a year ago, according to AAA.
(Excerpt) Read more at fortune.com ...
A protective tariff would fix it, although I can’t support the idea philosophically.
Well said. The ruling class in the Middle East—mainly Saudi Arabia—is all about money in the regime’s pocket, and power over their populace. Islam is the biggest problem, they know this and the sooner the Western nations can rid themselves of this pernicious dependence on Saudi, Kuwati, and all other pathetic states following their lead, the sooner the region will collapse. They have nothing to sell other than oil. Their time is coming sooner than they know.
fill the oil reserves with cheap oil
Ping.
OPEC just turned the screws for a lower price again. Try WTI at $62.45 at the time of this comment.
If you want to see less dependence on oil from the Middle East, make way for the Keystone XL and all other sources of oil from the north.
Yup. And then tell the sheep humping towel heads we are turning off imports from Saudi Arabia for a month.
Everything is going fine. It’s very early in the game. The uncertainty is causing a lot of speculation, which is just noise.
Nothing to do right now but wait and watch. Things will get interesting in about 6-9 months.
Since the Keystone oil was slated for export rather than use in the US, it should not affect our dependence. Since according to this article, over 90% of tar sands oil needs a $95 per barrel price to make economic sense and the remainder needs $75, for the moment at least Keystone is irrelevant.
http://insideclimatenews.org/news/20141105/oil-prices-erode-tar-sands-become-riskier-investments
I read a report in this week’s Barrons that said the smaller companies in the North Dakota fields are facing economic pressure from the drop in oil prices. It suggested that the big oil companies will be smart to snap up whatever small companies become available because of the pricing pressure.
Re: “If you want to see less dependence on oil from the Middle East, make way for the Keystone XL...”
Two problems:
From memory, the Oil Sands pump (or “dig”) about 2 million barrels per day. Almost all that oil is currently sold under contract.
New oil pumped south into the USA would require new wells (or new “mines”). All of them would be more expensive than the old wells. Break even for that new production could easily reach the $90-$100 range.
In the current price range, that means traditional financing for the pipeline would be impossible. Anyone who puts up money for the pipeline these days will demand a part ownership guarantee. And that will make the pipeline much more complicated and much more risky to build.
The ability to access tight oils shall forever cap the rise in price of Middle East oil.
Progressives hate that their philphocal brethern have lost control.
It would break far more than it fixes. Don't request the Feds to select winners and losers in the market place. We need our refining and petrochem industry also.
BS!!!
Since the Keystone XL pipeline was first public proposed in Feb 2005, oil imports from Canada have more than doubled, an additional 1.6 million barrels a day and that wasn't exported. We still import ~7 million barrels of day, over 3 million just on the Gulf Coast.
Since according to this article, over 90% of tar sands oil needs a $95 per barrel price to make economic sense
Inside Climate News? A propagation piece by the environMENTALists! Look at basic history of oil sands. They operated for decades below that price.
False. In Sito development with SAGD and other technologies have reduced cost from original methods of production. Just like horizontal drilling and hydro frac in the US, costs have come down with additional development.
Do you understand OPEC is maintaining their production levels? They are not "flooding the market". Saudi is actually producing less than last year.
The price of a barrel of oil is not just dependent on the cost of extraction. Natural gas is another factor in that it will displace some of the need for oil making the glut even worse. There is already a push to make natural gas use in vehicles friendlier to the average consumer. To try and determine the lowest cost feasible is not an easy thing to do. Rex Tillerson said Exxon can live with $40.00 a barrel I suspect when pressed the oil industry will find a way to exist at what ever price exists...and the market will decide that.
Don’t waste your time. This is the wishful thinking zone of people who believe that the money for drilling flies out of the butts of happy unicorns just like all the welfare money does.
The interesting thing is that the population of old wells just gets bigger and bigger. These are ever more susceptible to low price for just moving water and disposing it. I think most water disposal facilities make more money than many of the areas they support. The screws of regulation just get tighter and tighter so the costs to dispose water just go up.
We will run out of rate before we run out of oil but something like peak rate is probably real.... especially at these prices.
Texas drilling permits are down 50% in November. Producers need good short term prices to pay out shell wells. If they can’t do that they don’t pay out since there is not enough oil left after a year so so to generate a return.
We need to be creating our next energy future. Thorium is the way but we only work in crisis mode so the breath encouraging this is wasted as well.
I posted a thread on that when it was first announced. Since then I read a couple articles giving doubts that was real info. When I find something more substantial, I will post it.
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