The Saudis value market share more than profits. Sort of like Samsung vs. Apple.
Personally, I vote for Apple. I’d take the money first. Market share can wait.
The bottom line for the U.S.: A big plus for the economy. Obama is the undeserving winner - unfortunately. The oil industry is going to have a bit of a setback. But the economy as a whole will really benefit. But the jobs are going to be shuffled - unfortunately.
Right now we have a surplus, for awhile and maybe quite awhile, of hard working and skilled men and women in the oil industry who are going to be looking for a job. Someone needs to figure out how to put them to work. For a bit, they will come cheap. Not for long hopefully.
The Saudis need oil at $100 a barrel to fund the royal family and their government. Oil trading at roughly half that price means they have to dip into their reserves, while hoping they can force U.S. shale firms—particularly the smaller ones—to reduce production, or even go out of business.
But that strategy may be flawed. I’ll certainly defer to FReepers with expertise in the energy sector, but I’ve heard that the first fracking well in a particular area is the most expensive; second and subsequent wells are much cheaper. I’ve also been told that some of the wells in the Bakken field can still turn a profit if oil drops as low as $28 a barrel. No way the Saudis can match that and eventually, their cash reserves run out.
It’s also a fair bet that Russia, Iran or Venezuela will precipitate some sort of crisis in 2015 to drive up prices. My money’s on Vlad, but the Iranians won’t be far behind. Their economy hinges on oil, and they can’t operate with oil in the $50-$60 a barrel range.
Any layoffs in the new U.S. fields will be temporary.