re: Oil Wars: Why OPEC Will Win

quote:

---

The US doesn't depend on oil as much as Saudi. Saudi is 100% oil dependent.

---

Well no shite. It has been posted already. They have $1T in reserves while the US is $17T in the hole. Of course this won't bancrupt Exxon, Chevron, or any of the other huge well diversified companies but to pretend that they US oil/gas companies will be just fine at $50 oil is a joke.

quote:

---

At current price over 80% of production can still run and gun.

---

How in the hell can you know that? In the previously posted graph, at $80 most of our fields become less or not profitable to produce. We are below $60 now and still dropping if you haven't kept up.

quote:

---

The US doesn't depend on oil as much as Saudi. Saudi is 100% oil dependent.

---

SA's entire petro industry is completely coordinated. They have obscene cash reserves and a significantly lower cost to extract. They have decided they will not cede market share via production cuts anymore and there is not much we can do about it. We cannot make them cut production.

We also cannot continue to grow our production at the current rate in a depressed price environment without a significant increase in efficiency. Even if we could, it would just serve to further erode prices.

quote:

---

At current price over 80% of production can still run and gun.

---

Not so much for exploration. Lots of companies are already feeling the hurt.

If SA's refusal to cut production is a sign that the era of inflated oil prices is over and a new normal of $50-75/bbl is established, the US energy industry is going to contract. Majors will weather the storm, but you are in denial if you think everything is going to be hunky dory with the work force.