Reuters: Leaner and meaner: U.S. shale greater threat to OPEC after oil price war
NEW YORK/HOUSTON In a corner of the prolific Bakken shale play in North Dakota, oil companies can now pump crude at a price almost as low as that enjoyed by OPEC giants Iran and Iraq.
Until a few years ago it was unprofitable to produce oil from shale in the United States. The steep slide in costs could encourage more U.S. shale output if OPEC members cut supplies, undermining the producer group's ability to boost prices. OPEC ministers meet Wednesday to weigh output cuts to end a two-year glut that has pressured global oil prices.
In shale fields from Texas to North Dakota, production costs have roughly halved since 2014, when Saudi Arabia signaled an output free-for-all in an attempt to drive higher-cost shale producers out of the market.
Rather than killing the U.S. shale industry, the ensuing two-year price war made shale a stronger rival, even in the current low-price environment.
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WNU Editor: An excellent explanation n why the top price for oil can never exceed $50/barrel. On a side note .... this is why the recent OPEC agreement to cut production is not going to fly .... Ex-Saudi minister on OPEC: ‘We tend to cheat’ (Fuel Fix).
Update: This is how Russia manipulates the oil markets to its advantage .... The OPEC Oil Deal Sells Fake News for Real Money (Leonid Bershidsky, Bloomberg).
1 comment:
It does seem though that many of the costs, perhaps the greater costs, of shale production are not included in the assessment. Those costs, include damage to ground water systems and human health, have been ignored and will continue to climb.
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