Posted on 10/26/2014 7:02:45 AM PDT by thackney
We have heard the story before: political turmoil in the Middle East, disruption of global oil supplies by members of OPEC.
In the past, the unrest in Iran would be causing oil prices to spike up. Instead they have been falling by more than 25%. Gas prices at the pump have fallen to less than $3 a gallon in many markets.
That's quite a change from the past 40 years, when OPEC and other foreign oil producers have wielded oil as a political and economic weapon to slow down and even cripple the U.S. economy.
Saudi Arabia was by far the world's biggest producer. In those years we were highly dependent on foreign oil and captive to OPEC supply disruptions, which led to a wild ride of oil price gyrations.
No more. OPEC is becoming a toothless tiger.
And the underappreciated reason for this bullish turn of events is the U.S. energy revolution and the technologies that made this all possible.
Thanks to horizontal drilling and other smart drilling technologies, we have unlocked a treasure chest of shale oil and gas and other unconventional domestic sources, so America now has an almost unlimited supply.
My company, Continental, has been a major player in drawing oil and gas from the Bakken Shale in North Dakota and the South Central Oklahoma Oil Province (SCOOP), where we have created tens of thousands of jobs and driven the unemployment rate to the lowest in the country.
Meanwhile, oil and gas output in Texas, Oklahoma, West Virginia and Pennsylvania has more than doubled in six years.
What all this means is that America is no longer a bit player in global energy production. Now our country is well-positioned for energy independence by the end of the decade and then for world energy supremacy for decades....
(Excerpt) Read more at news.investors.com ...
What is the break even price for fracked oil?
Harrold Hamm ping
I think I read $60.
A couple thing to understand before answering your question.
First, we use hydraulic fracturing on a lot more than just tight formations like shale fields.
Second, there is not a single number, not even for individual fields. There is average or median prices, but dropping from $100 to $80 will start lowering the amount of drilling. First the marginal locations and the production companies that have too much debt.
Even if price drops down to the average break even, that means about half is still drilling. Companies with better financial positions and believing that the dip in price is only a dip, that it will return back up to more profitable levels, they will keep drilling new wells. They will take advantage of the drop in cost due to drilling rigs coming off lease and crews wanting more work.
Yippee!
Hamm.........great name for someone who is sticking it to the Muzzies.
Yesterday I made a WAG that Saudi oil cost about $35 when it reaches the refinery.
Your opinion please, am I even close?
The Brea even price keeps falling as the technology, efficiency and productivity increases.
Oil & Gas have tripled productivity in the last 4 years. Wind & Solar tool more than 40 years to double their productivity, despite trillions invested worldwide.
So, the breakeven will continue to fall over time making the alternatives look worse and worse.
I’m ok with paying a fair price at the pump in order to stick it to the muzzie countries, especially if we can remove the Fed tax.
$2.629, unleaded regular in SC a couple of days ago.
Help! Will someone please remind me again why we’re wasting billions of our taxpayer $$$ on so-called clean “green” alternate energy development? Solynderella comes to mind.
Lew
There is some old stuff that probably cost that little. I don’t think their average is quite that low unless they quit trying to produce anything new. And any oil company, even Saudi Aramco, has to keep replacing reserves and those are not cheap these days.
If they don’t replace reserves, they are eventually going out of business. That field I linked above is no way near that cheap. Almost double would be my wild guess.
Here is what I have heard/read.
Tell me where I maybe wrong.
I have heard that even thogh we are basically energy independent with the Saudis capable of producing over 10 million barrels per day they can still control the price of crude to a certain extent.
Currently, I have been told that the Saudis are pushing crude prices down since they want to kick Russians in the ass for trying to steal their markets while simultaneously destroying Iran who wants to nuke them to death.
They blame their current high rate of production, near ten million barrels per day I have heard on not wanting to lose market share but in reality its the above.
How close is that to the truth? I do respect your opinion.
There is another factor: ISIL dumping what amounts to captured crude on the black market for rumored prices around $40/bbl. They don’t have any skin in that game, it cost them nothing, but it is rumored to be bringing them around a million dollars a day. Maybe the Saudis will go shoot up their trucks?
These 6 Countries Will Be Screwed If Oil Prices Keep Falling
I don’t see their work doing more than raising overall prices.
Production is down in the area. Selling stolen TV’s in the back alley does not lower prices inside the stores.
Now THAT is a magnificent example of understatement.
Professor, I have a question.
We are getting the result I’ve been clamoring about...lower prices at the pump. You’ve been discussing the effect of modern production techniques on $/bbl rates, and OPEC profits.
Recent events in Iraq have ISIS et al capturing huge oil holdings and selling them way below market prices to fund their murderous ideology.
My question is:
What effect is this having on the “global” crude oil prices?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.