Last time this happened was in 1986, and the oil business stayed at dead stop in the US until 1992, other than stripper wells and an occasional workover.
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And in spite of the bad press associated with issuance of Saudi government bonds to cover the deficit between oil revenue and budget; the current Saudi government bonds are bought by Saudi banks. And so the 2015 $40 billion deficit projection for the Saudi budget cannot be overstate in light of the $1,000 billion ($1 trillion) wiggle room associated with Saudi government reserves and Saudi bank reserves. Frankly the financial prowess of the Saudi government exceeds the financial prowess of the Saudi banks so the government bonds are the better option low oil prices or not.
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Saudi Arabia is the low cost high volume producer. Shale oil production has lil or no impact on global oil prices. You can say it does...but mark my words...when The Saudis stop pumping prices will go up.
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The Saudis produce a barrel of oil for about $21.00. Frackers can produce a barrel for between $28.00 and $85.00 a barrel. We simply cannot compete.
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In the last year new exploration for shale based oil in US has dropped 40% and rig counts have dropped 58%. Do you know why? Cause we cannot compete.
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Efficiency gained in fracking technology will be offset by the fact that the most easy to exploit resources...least costly to recover...are always drawn first.
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Every American benefits from ban because it results in lower natl gas costs as do all manufacturers, and the ban encourages increase in manufacturing because US energy costs are far below those around the world.
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US still consumes twice as much oil as we produce...21 million barrels a day vs 9 million barrels a day. Do not rescind the ban until we produce more than we consume.
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US refiners spent 85 billion in last 25 years to equip refineries to refine discounted heavy crude imported from foreign markets. US energy companies just spent 9.5 billion to build a liquefied natl gas plant in corpus cristi. When it makes economic sense to refine lighter sweet crude you can bet your bippy they'll do it.
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US frackers are going bankrupt at current prices. Again...clearly demonstrating that frackers cannot be profitable at current prices.
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Fracked oil...at best...acts as a cap to prices other low cost high volume producers charge. That is extent to which fracked oil has on oil prices on global market.
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US export ban only impacts unrefined oil...we can export all of the refined products we want.
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refining is not bottleneck...inadequate delivery mechanisms are the bottleneck.
Mattress Mack's wife should be happy.
The answer to this question is "as low as it needs to go to bankrupt A LOT of US oil producers". The fact of the matter is the Saudis can produce oil for less than 10 USD per barrel and they have been giving up market share to US producers of unconventional oil. The will let the price go lower and lower until company's fail and production drops. They have the cash to outlast us. When COP spun off its downstream resources, it eliminated its ability to weather long periods of low commodity prices. It's scary folks!
Prices will fall until production starts to drop from somewhere. Either companies start failing or OPEC cuts production. Either one big blow price dip to 15 or 20 or an extended period in the 40's. Either way something has to give and right now it is our jobs. It's going to get uglier before any recovery.
Today WTI @ 40. Some sources said it will @ 15 and @30. How long this crisis will last?
The price of oil will cease to fall at the point the unconventional cease to produce. The unconventional resources are not 50-75 year resources. Exploration ceased so as the production ceases the price of oil will increase. But at the time the price of oil increases the unconventionals will have ceased to exist. ...wash, rinse repeat.
WTI @ $30
http://money.cnn.com/2015/08/18/investing/oil-prices-15-kotok/
Smart investors won't buy COP stock at this moment. The business is struggling.