B.S. title to a nonsense article that contradicts itself from paragraph to paragraph. Still, there are a few useful grains of information included.
First, while unsavory in other ways, the Saudis are NOT flooding the market with oil. Saudi production has been fairly stable, in their attempt to maintain market share. If anything, it has been the US flooding the market with oil, at least until prices fell so low that some US producers began to fall out.
The present dynamic is production increases from Iran and Iraq, in particular, creating or “pushing” the US slump. Assuming that the article is correct (a useful grain of information?) in pegging Iraq’s cost of production at $11 / barrel (and I would assume other area producers are in that neighborhood), this is clearly problematic for US producers. Iraq, for example, is desperate for cash, and with the Saudis and Iran at each other’s throat (no cooperation there), Iraq’s only option is to pump as fast as they can at $10-$20 per barrel profit. Other countries are in the same situation. Venezuela, comes to mind.
As a side note, one would think that “greenies” would hate Obama to no end, for enabling Iran’s contribution to cheap oil.
One other “useful grain” is the article’s statement that “It takes $10m and just 20 days to drill for shale.” I’d assume the cost and time to reopen most shuttered wells, outside of offshore platforms that have been moved, is no more, at worst. This all rather renders the idea that both domestic and overseas production capacity will crash due to “lack of investment”, causing shortages and high prices, quite unlikely, at least for any prolonged period of time. Barring a major Saudi - Iranian war, as output begins to fall in a few years, prices will begin to rise, and new wells (and shuttered old ones) will be reopened. Shale oil technology will be even cheaper, and more available, worldwide. Put another way, as long as there are “enough” recoverable deposits at $50-$60 per barrel, and no major wars come along, the price will not head north of there for long.
Either you produce it or you lose the lease. If you shut a well in (close the valves), there is no guarantee it will produce like it did when you open the valve back up--in fact, most don't.
So most producers will continue to produce the well or plug and abandon it. The latter is done with cement pumped into the wellbore. It can be drilled out, but that costs almost as much as a new well, and the plugging process damages the porosity in the rock along the original wellbore. You can't just turn them on and off. It is a popular misconception with horizontal oil wells, but it just doesn't work that way.
Oil prices will saw back and forth till equilibrium is reached which in my opinion is somewhere around $40 ~ $50 per barrel. But, prices will always be volatile and subject to politics of the time, always have been always will be.
“Other countries are in the same situation. Venezuela, comes to mind.”
Venezuela’s situation is even worse. Venezuela’s oil is “heavy” and only brings about $23/bbl in today’s market. I read that their production cost is $17-18/bbl.