messymessy wrote:Isn't this a fairly common OPEC strategy to discourage oil development in other areas? Other than Russia, it's likely unrelated to the economy.
Oil prices get high. Other sources of oil are developed. OPEC overproduces and drives competitors out of business.
Just a guess, but if I remember right, oil from Canadian tar sands cost $60 a barrel to produce. Eventually, at $43 a barrel, they will cease production. Then OPEC is free to restrict supply again. Seems like this cycle has occurred twice in the last 40 years.
I work in the oil patch in Alberta Canada, depending on which plant you go to it ranges from $28-40 a barrel to pull it out of the ground. That being said they can earn some additional money from gases/liquids generated by the processing but they are pinching pennies now expecting this to last awhile and even considering the possibility of lower pricing for multiple years. She's tough, but we kind of thought it wouldn't all go down easy.
Also we must all keep in mind, oil and gas are two different things. The price of gas can easily go much higher as the refineries are probably maxed out for output regardless of how much oil is available to process and at whatever price. And that's the thing to keep in mind as well, the Saudis oil comes out so pure that the refining process is so easy that their price out of the ground is likely under $10 a barrel(that's a guess, I have no idea what it costs) so they can out live a lot more expensive plants and potentially buy some of these places at lower prices.
Posted: Thu Aug 13, 2015 6:23 pm