Posted on 02/12/2016 12:52:48 PM PST by Zhang Fei
Wood Mackenzie's report, cited by the energy news service Platts, said about 3.4 million barrels' worth of oil a day was not profitable below $35 a barrel. According to the International Energy Agency, the world's supply is 97.07 million barrels a day.
While today's oil prices are below this threshold, the report suggests the price at which US shale and other producers would be forced out of the market is lower than previously thought.
As Platts writes, "For many producers, being cash negative is not enough of an incentive to shut down fields as restarting flow can be costly and some are able to store output with a view to selling it when prices recover."
This falls in line with a report from Citi in December showing that the amount per barrel that most producers needed to receive just to keep the lights on, referred to as the cash cost point, was well under $30.
(Excerpt) Read more at finance.yahoo.com ...
The problem is that a lot of countries are committed to spending a huge profit per barrel. A lot of dictatorships are hurting now.
and once again, American ingenuity, which obama/sanders/hillary et. al hate, will make 30 a barrel profitable
Profitable could mean the cost per barrel is $32 to $33. I think the Saudis would like to make a little bit more than $2-3/barrel.
that shouldn’t be our business, but it is. Because dictatorships that go broke turn to war sometimes
and WHY wasn’t gas this price when i drove my cab 3 years ago :)
4.35. I remember. would break my heart at the end of the night :)
now if you take the 8 mpg Crown Vic I drove and put 160 miles on a 12 hour shift , the comes out to 87 to fill the tank.
Take a new hybrid cab that gets 40, at 2 bucks with NY taxes, those same 160 miles now cost 8 bucks!!!
can that be right?!?!
Saudi costs average about $3.
I would very much like to hear your comments on this, particularly on whether this figure addresses existing production and not new shale extraction.
I would guess that ocean freight from the Persian Gulf to the civilized world would exceed $3 per barrel.
A VLCC that can transport 2m barrels of crude from Dubai to Newark would take about 30 days to complete the journey, at a rate of about $100K a day. That's $3m divided by 2m barrels, or about $1.50 per barrel. In contrast, fracked oil that has to be transported by rail inside these United States, from point of extraction to storage facilities, involves rail transport costs of $10 to $15 a barrel. That's part of the reason why WTI is consistently a few dollars less than than Brent, despite the fact that WTI is easier to refine.
The makes crude costs out to be about 83 cents a gallon.
the need for oil continues to grow and there is a never ending supply of it. If you cannot make enough on what is produced, then with the reduced cost more users(transportation, plastics, auto users, etc., can increase production as users increase demand. If you can’t make it on the front end, make it on the back end. There is still a way. Oilmen may make some less but will remain very, very rich!
Wow, really? Wow.
$0.25/gal gas, here we come!
With the US lifting the prohibition on the export of US crude, would you expect WTI to eventually trade at a premium to Dubai crude?
You'll find that Newark, NJ is substantially closer (>10%) to the Cape of Good Hope than Houston, TX. I expect (apart from first mover advantage) and hurricane-free weather, that's why New York City was the major seaport for the East Coast since the 13 colonies period. As to WTI vs Brent, the rail or truck transportation cost is there whether or not WTI is sold abroad, and the spread has in fact narrowed to a few bucks a barrel from a peak of about $23, thanks to improved domestic infrastructure for transporting WTI.
It's just really hard to beat ocean transportation costs on very large ships. It's cheaper to transport a shipping container from Shanghai to New York than it is to transport it by truck from San Francisco to New York. Heck, I read that it's cheaper to ship a container by sea from Shanghai to New York than to ship it from Shanghai to Los Angeles, and then transfer it to a US-flagged ship heading to New York (thanks to the Jones Act).
The estimated production costs from other countries:
http://money.cnn.com/interactive/economy/the-cost-to-produce-a-barrel-of-oil/index.html Not the same estimates.
The 7 largest US refineries are on the Gulf Coast and receive their domestic crude by pipeline. New Jersey refineries aren't served by crude pipelines and don't receive crude from the Mideast.
But the financial guys say we’re dooooooooooooooooooooomed!
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