Low Break-Even Prices Are For Everyone--Not Just Shale Companies

Shale companies have pushed break-even oil prices below $40 per barrel---but so have major oil companies.

Analysts commonly portray cost reduction as something unique to the tight oil companies. Data from annual reports filed with the U.S. SEC (Securities and Exchange Commission) suggests otherwise.

Along with tight oil companies, ExxonMobil, Royal Dutch Shell, ConocoPhillips and ChevronTexaco all had 2016 break-even prices below $40 per barrel (Figure 1).

How is it possible that ponderous major oil companies have similar break-even prices as much smaller, innovative shale companies? Simple--costs have fallen for everyone since 2014 as oil field service companies competed for limited projects by working at a loss.

I read an article like this and I thank God for Capitalism. The shale boom and traditional oil companies’ reaction to it (for the most part) is a perfect example of how Capitalism makes our lives infinitely better over time. The story of my childhood in the 70s and even into the 80s was oil scarcity. That no longer is an issue. And the United States is a major oil producer again. Who would have thought that 30 or 40 years ago? Our oil supposedly was tapped out other than a few places in Texas and Alaska or offshore. Now states like North Dakota and Pennsylvania are oil producers. Amazing. The next time some 20 year old Occupy Wall Street type screams about how Capitalism is screwing everyone, someone should hand him this article (if he can read).

Advances in technology and efficiency are real but falling break-even prices are no miracle and are not a shale company exclusive. Instead of celebrating lower break-even oil prices, we should be lamenting lost future cash flows that an oil industry depression has wiped out.

What do you mean "we", Kimosabe?

"Lost future cash flows" to the oil industry are captured future cash flows for all consumers, keeping money in our pockets, making other products cheaper, and making American products more competitive worldwide.

And we got lots of farmers...

That friggin $0.12 cents increases the cost for food and deliveries of prepped meals or anything that goes on the back of a truck but wait!!!.....There’s more.

They are also increasing DMV fees have been increased $25-$175 for vehicles.

Aaaaand as you noted farmers, get ready for a $0.20 cent per gallon increase on diesel and there is some 4 percent diesel sales tax increase, for what I don’t know.

The givernment figures they can get away with this because because Gay Davis, The Givernor of California had imposed similar hikes on DMV fees.

The citizens, better known as “The People” can obviously afford this tax. they’ve paid it before and boy howdy, good times are here again.

Here is the best part: The California Givernment is looking at a $60 billion dallyer shortfall. How that effin happens I don’t know, as they take in more taxes this year than they did last year.

Anyway, they are looking to close that gap with this tax.

“Oh, I thought this tax was fixing transportation infrastructure and road???!!!”

Sure you did. And your given name is Gullible.

No, no. They are supposedly earmarking earmarking only a little more than 55% of those funds for roads.

The sucker citizen will lose the other 45% to the general fund, where they will continue to piss away even more monies on some phantom projects no one knows about.

I’ll bet even that will never close the gap and they will then look to payroll taxes and property taxes once again.

Right now, I have a friend who just received a brand new property tax bill from the county assessor, who is a friggin thief.

They assessed the home $1.2 million, which is a joke because every home around them is selling for just under $1 million.

The assessor understands the apathy and that people mean to bitch about a bogus assessment but, because they live and work, like they are busy, they either never get around to challenging it or just can’t stay on hold forever when calling into the county assessors office.

Givernment: “We’re here to help you...”

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