Falling oil prices.....be careful what you wish for....
Nov 6, 2014 14:34:31 GMT -5
Post by Cranky on Nov 6, 2014 14:34:31 GMT -5
Falling oil prices are a wonderful thing.....except......why are they there and what will happen?
Here is my fearless prediction.......
Falling oil prices will shut down a lot of fracking and oil sands projects. They in turn will remove any excess capacity from the demand and guess what will happen on the other side? The rebound price will make your head explode. And because re-starts are measured in years...plan on a really long head explosion....along with the world economy.
Be careful what you wish for......
Falling Oil Prices Make Fracking Less Lucrative
Oil prices are down than more than 25 percent since June and are staying low for now. Drivers may appreciate that, but for oil companies, it's making some of the most controversial methods of producing oil less profitable — and in a few cases, unprofitable.
Most of the world's oil is selling for about $80 to $85 a barrel now. But not all oil is created equal. In the Middle East, it's cheaper to produce, at a cost of less than $30 a barrel on average, according to the Norwegian firm Rystad Energy.
But in the Arctic, producing a barrel costs $78 on average. From Canada's oil sands, it's an average of $74 a barrel. And because those are averages, some companies have costs that are higher — which means there could be drillers currently producing crude at a loss.
Here in the U.S., the oil drilling boom is due largely to technologies like hydraulic fracturing, or fracking, used to force oil from shale formations deep underground. Producing this oil, Rystad figures, costs an average of $62 a barrel.
"What is really interesting for the U.S. drillers and producers is how long they are going to continue the high activity levels that they have, now that prices are going down," says Per Magnus Nysveen, head of analysis at Rystad.
www.npr.org/2014/11/04/361204786/falling-oil-prices-make-fracking-less-lucrative
Oil prices are down than more than 25 percent since June and are staying low for now. Drivers may appreciate that, but for oil companies, it's making some of the most controversial methods of producing oil less profitable — and in a few cases, unprofitable.
Most of the world's oil is selling for about $80 to $85 a barrel now. But not all oil is created equal. In the Middle East, it's cheaper to produce, at a cost of less than $30 a barrel on average, according to the Norwegian firm Rystad Energy.
But in the Arctic, producing a barrel costs $78 on average. From Canada's oil sands, it's an average of $74 a barrel. And because those are averages, some companies have costs that are higher — which means there could be drillers currently producing crude at a loss.
Here in the U.S., the oil drilling boom is due largely to technologies like hydraulic fracturing, or fracking, used to force oil from shale formations deep underground. Producing this oil, Rystad figures, costs an average of $62 a barrel.
"What is really interesting for the U.S. drillers and producers is how long they are going to continue the high activity levels that they have, now that prices are going down," says Per Magnus Nysveen, head of analysis at Rystad.
www.npr.org/2014/11/04/361204786/falling-oil-prices-make-fracking-less-lucrative
Here is my fearless prediction.......
Falling oil prices will shut down a lot of fracking and oil sands projects. They in turn will remove any excess capacity from the demand and guess what will happen on the other side? The rebound price will make your head explode. And because re-starts are measured in years...plan on a really long head explosion....along with the world economy.
Be careful what you wish for......
