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Shale oil requires a certain price level to warrant drilling. That level is much lower than it was a decade ago, by the way.

But once the well is drilled, its drilled. Drop the price all you want, the well keeps on producing.

New shale oil helped drive down prices, which was a good thing. Decisions by the Saudis also helped, and Iranian oil coming into the market will weaken prices more. So there won’t be many new wells drilled for a while. But as soon as the market tightens up a bit, they’ll be back. They know right where the oil is, they don’t have to go looking for it, which helps to keep the “go” price down.

If they can get a better pipeline network built, the “go” price gets even lower. In the long term, this is very good for us.

By the way, this is normal in the oil business. In the late nineties oil dropped to $8 bucks a barrel. There was blood in the streets in some producing countries. It always comes back up. And it always goes back down again though, thankfully, not back down to $8.

Shale oil requires a certain price level to warrant drilling. That level is much lower than it was a decade ago, by the way. But once the well is drilled, its drilled. Drop the price all you want, the well keeps on producing.

The catch is, the well doesn't keep producing at that same flow rate.