Posted on 10/25/2014 6:30:08 PM PDT by 2ndDivisionVet
Crude oil prices have dropped below $80 a barrel, down more than 20 percent just since June, meaning price estimates by the U.S. Energy Information Agency (EIA) have been far too pessimistic. And these low prices and the fear that they could go even lower are making a number of oil industry people increasingly nervous, with some prediciting that the prices are getting so low that oil companies are going to stop new drilling and even cut back on production from already drilled wells.
On October 7, the EIA estimated that prices for West Texas Intermediate (WTI) crude oil will average around $95 a barrel in 2015 while its estimate for Brent crude the benchmark for more than half of the worlds crude oil supply would be more than $100. With December delivery of oil on the New York Mercantile Exchange at $80.61 on Friday (and touching a 52-week low of $79.10 a few days earlier), the EIAs estimates may turn out to be off the mark by 20 percent or more.
The drop in demand and the increase in supply, thanks to the fracking revolution (hydraulic fracking coupled with horizontal drilling), is causing consternation locally as well as internationally. Saudi Arabia, the swing supplier in OPEC, at first cut its production earlier in the year by 400,000 barrels per day in a failed attempt to halt the decline in prices. When that didnt work, the Saudis capitulated and cut their prices in order to maintain their market share. This has precipitated a price war as small OPEC members have begun to cut their prices as well....
(Excerpt) Read more at thenewamerican.com ...
The oil is there. We know how to get it. It means that no one will be able to sell the peak oil theory for years to come.
Energy Independence Now! Screw the Arabs.
There will be a drop in activity. How deep and how long remains to be seen. We almost always out drill demand and have a crash.
This is the first true overproduction I have seen in nearly 40 years in the business. I expect it won’t last that long though. Maybe 3 years at the most.
Better to have markets dictate production than to have governments take over.
Be interesting to see if he's right This Time
Here in SW PA they’re fracking like rabbits.
Nobody saw this coming? We compete in a global market. Our dependence lessening on OPEC as our production increases drives down their prices. If imports were to be boycotted, domestic prices would soar. Might make the OPEC chiefs whine, but India and China would lap the cheap stuff up.
It's called an economic cycle. People used to know about such things, before government schools became political indoctrination facilities for global warming and homosexuality.
Oil producers will be encouraged to innovate again to reduce production costs to maintain or increase profits.
Indeed ! Whoever was the initiator of fracking should be held in the same regard as Tesla and Edison.
I saw what he had to say. Someone will be right. Just a matter of time.
The oil is there. We know how to get it. It means that no one will be able to sell the peak oil theory for years to come.
OPEC might try to buy it up ,then close it up
Supply and demand. Simple as that.
“Here in SW PA theyre fracking like rabbits”
A wolf has it’s eyes on those rabbits.
You got that right. damn wolf wants to tax them to death. and that’ll be the end of those fracking rabbits.
Wanna save those fracking rabbits?
VOTE CORBETT on Nov. 4th.
“OPEC might try to buy it up ,then close it up”
Who is OPEC going to buy it from?
There are literally millions of owners of oil and gas minerals in the US. The process is the producers “lease” the O&G minerals for a sizable share of the oil produced for a set time or until they quit producing the leased O&G. Only a fool would sell their minerals, with the possible exception of them paying us owners many times more than it would lease for in a lifetime, at which point even the Saudis would be long broke.
Right now the US fracing oil production cost is around $67 a barrel, with that cost coming down all the time. Its unlikely oil prices will go below the cost to produce anytime soon or for any length of time. OPEC and Russia’s production costs are much higher which puts them in worrisome spots.
OPEC cost of lifting the oil and delivering it to a refinery is above $67?
I am making a WAG here, but isn’t it about half that?
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