Makes you wonder, if they can sell it for $50 a barrel now, why couldn’t they 10 years ago?.............
Well, there is a huge increase in supply, and demand has somewhat decreased. This is not a mystery.
The oil market is a huge racket, that’s why. It’s as far from a free market as possible.
We won’t be drilling as much at those prices. The shale wells drop off fast. Without the dollars to pay for sufficient drilling, total production will fall, while cheap prices will increase demand, and the ride back to the top will start again.
Oil demand has increased 9 million barrels a day in ten years.
The real cost of oil for an oil company to remain, is the price to produce the next barrel of oil. If you cannot get the fund to replace reserves and production as time moves forward and you sell what you have, you are going out of business.
Right now, the supply has grown so fast, that the investment is pushed past the demand, combined with a slowing demand growth.
So the folks that just competed a $10 million dollar well in October, may never break even, depending on the length and depth of the price dip.
It was around $40 a barrel in Dec. 2004...
There were all these “fears” of things that could possibly, maybe, happen. Don’t you remember?
The KSA is selling below production cost. Their production cost is around $50 or so per BBL.
They have $800B in reserves, so they can do this for a while.
they could have except that OPEC controlled the market because they controlled supply. With the Obama administration's efforts to keep oil production low in the U.S., they ,(OPEC), could maneuver the oil prices as they wished, and they wished them high.Now that independent oil producers in this country have ignored Obama, advanced new techniques such as Fracking, and created an overwhelming new supply of oil at a reasonable price, the middle east is in a panic. They keep the price low now to attempt to put the U.S. out of the production business....it is more expensive to explore and develop new sources that to just pump existing ones....won't happen, the prices will stay low for a little while and they gradually increase to where they belong and in my opinion that is about 60-70 dollars per bbl.
Price fixing.
supply and demand...
low alternatives and low elasticity of demand - OPEC control enough of the supply to force the inelastic consumers to buy at the higher prices they set. If the buyers still have to buy...the new price is established.
The strangling of western Economies has been the game ever since.
Too bad for the Market Terrorists that Capitilasm is guided by rules and corrections will always result, though as in this case, slowly at times.
If the new energy sources that are controlled by Israel are valid, we will likely see significant changes internationally in all matters. Unfortunately, the new reality is also fraught with danger as old regimes die hard.
“Makes you wonder, if they can sell it for $50 a barrel now, why couldn’t they 10 years ago?”
Fracking
I was also told by responsible officials that at the time, they had a "Thousand years of reserves, even factoring in increased demand." That was the mid 90's. They were not counting new finds in the Empty Quarter that were since conservatively estimated to double known Saudi reserves.
I sometimes think the squalid truth of the matter is that without some sort of output constricting mechanism, the world would drown in cheap crude. Shortage? Reserves drying up? Could be from the same school of thought thast brought us Global Warming.
The biggest thing that actually is GW's fault? Not leaving behind an energy policy. After all, he was in the awl bidness hisself. For the next century and half at least, as much as the idiotic Greenies and Luddites will weep and knash their teeth, the world will run on hydrocarbons and nuclear power.
Sure, we'll switch to Hydrogen, fusion, solar, but that has to be a long-term coherent plan. Coal, Oil, Gas? They're cheap, abundant, and very clean when used with modern technology.
Can we not have some non-lawyer make that point while serving us in the government? One thing for sure about the awl bidness, somebody always lying. Maybe those Saudi officials were lying to me, but Muslims hardly ever lie when they've been drinking.
I’ve read your question about a dozen times but still can’t make heads or tails of it.