The price has not plummeted. They are still very high. Oil prices should be at about $30-40 if drilling was expanded.
“They are still very high. Oil prices should be at about $30-40 if drilling was expanded.”
Realistically, $10 a barrel is a fair price on the low side, and maybe $15 a barrel on the high side. And $1 a gallon for gasoline should be max.
Nope. With the technology that led to the increase in onshore production and the extra hoops offshore drilling has to go through, the cost of drilling a well has gone up considerably. Figure $10 million from spud to completion for a Bakken horizontal well, and if oil drops below sixty dollars (considered break-even--NO profit), expect only enough drilling to hold leases by production, not full development.
Right now transportation costs have to be factored in as well, considering there still isn't enough pipeline capacity to get the oil to refineries, and that helps keep the price of refined products up as well.