re: Oil Wars: Why OPEC Will Win

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

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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.

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

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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.