7 Reasons Why Oil Prices Won't Plunge

Forbes ^ | April 29th 2013 | Christopher Helman

[Laurent.w]

U.S. oil output is now at 6.5 million bbl per day, in third place after Saudi Arabia and Russia (both at roughly 9.8 million bpd).

There are seven good reasons why we will not see a sustained plunge in crude.

- The decline rate in the Gulf of Mexico, for instance, is 23%, with the North Sea is about 10%.

That means the industry needs to develop a new Saudi Arabia every two years, just to stay even.

- Despite the enormous growth in the U.S., the costs of getting that oil out are growing at unprecedented rates. Bernstein figures that the cost of producing the last barrel rose from $89 in 2011 to $114 in 2012.

About 95% of U.S. production was done at a marginal cost of $71 a barrel.

- The Saudis have proven that they can be very disciplined when it comes to cutting output. In 2009 when oil prices crashed they scaled back by 1.5 million barrels per day.

[Laurent.w]

So the prospect of gas as low as $2 a gallon, as proposed by Newt Gingrich and Michele Bachmann, is not realistic.

[knarf]

I think it is / was realistic in that Newt would’a cut the corporate taxes (and others) to make doing business in America the dream place of bygone times.

[AlexW]

First, the USSA will have to get rid of the Marxist president
and his fellow travelers and revert to being the USA.
Nest they better get busy on developing the vast oil shale
deposits that are in the US.

[urbanpovertylawcenter]

#8. Trillion dollar deficits as far as the eye can see and inflationary monetary policies at the FED

Z Dollar ain’t what she used to be.

[maddog55]

It is but not under the dreaded “new normal” caused by liberal scum voted in by idiots.

[thejokker]

Commodities including oil are essentially “auctioned” off. Obama has re-inflated a deflating dollar with massive Government spending creating a bubble dollar. With lots of money in the system the bidding on oil can go higher. When the dollar bubble bursts (slowly or violently) oil will fall.

[Clinging Bitterly]

btr

[Resolute Conservative]

Plus cut out all this special blends crap.

[thackney]

U.S. oil output is now at 6.5 million bbl per day

US oil production reached 6.5 MMBPD last September. November it topped 7 MMBPD and has stayed above that since.

So the prospect of gas as low as $2 a gallon, as proposed by Newt Gingrich and Michele Bachmann, is not realistic.

It wasn't realistic when they claimed it, it isn't now, and isn't probable to become so in the foreseeable future. They were either speaking what they thought you wanted to hear and believed you were too uninformed to know better, or they were fools. No informed person of the industry was making such claims.