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I see global political, economic and military forces lining up to ignite a war in the Middle East which will have the “side effect” of closing the Persian Gulf to oil transportation. Look at how many global players would like to see cheap Saudi oil cut off, and oil prices spiking upward.

That’s what my crystal ball says. War in the Straits of Hormuz.

Here Is A Simple Way Of Seeing Who Gets Screwed Most As Oil Tumbles
http://www.businessinsider.com/oil-cash-costs-2014-12

Much has been made of the “breakeven” oil price for the world's drilling projects. This is the level at which the price of oil covers the cost of extracting the oil.

A simpler way to look at when the biggest oil players will start feeling the squeeze from lower prices is the “cash cost.”

“Without OPEC action, an outage, or other response, cash cost is the only true floor,” Morgan Stanley analyst Adam Longson said.

Cash cost is basically what it takes to keep oil production going, not what it takes to make oil production profitable or for a government to hit its budget projection. If you drop below your cash cost on a project, you've got to turn out the lights.

In my opinion, the costs without royalties are meaningless.

Here in the Permian, all my information says fracked-gas should continue to grow because of the chemical feedstock involved; lots of rich-gas is being developed (8-10 LBS).

Crude needs to be at around $90/BBL for WTI and over $80/BBL for “Brent-equivalent” to make drilling activity viable.

Keystone PPL II appears to be a victim of this adjustment.

Sucks for me, cuz I need a job out here.

Dick Cheney said it best in about 2006 - a rational, sustainable market price for oil is about $40 per barrel.

With inflation and higher costs of tracking, that price is probably about $50 per barrel.

That equates to about $1.75 per gallon at pump.

Regardless of oil prices, natural gas resource development will continue in the United States.

As far as domestic oil production goes, I think the fracking revolution has forced the domestic oil production genie is out of the bottle.

Domestic oil production has been the one positive thing keeping our economy alive and Americans are waking up to the fact that developing American oil resources is a key to good paying American jobs.

Until now, the Obama Administration's official policy of killing oil production but closing access to rich, low production cost oil deposits on federal land in America has forced American oil producers to exploit worn out or marginal oil fields on private property with high production costs.

With the new leadership in Congress, there will be pressure to open up development of more low cost production domestic oil fields whose development is currently blocked by the Obama Administration

It seems to me that we MAY be witnessing a bottom in crude oil futures right now in the $53-54/barrel range.

See chart pattern. We made a new low on Tuesday/Weds and then closed higher. We call this a key reversal.

http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

I am not a crude oil futures expert, and I did not stay at a Holiday Inn Express last night.