Too late for OPEC to stop the shale revolution

Posted: August 6, 2015 by oldbrew in Energy, fracking, shale oil

[image credit:]

[image credit:]

Saudi Arabia may go broke before the US oil industry buckles, reports the Daily Telegraph.

If the oil futures market is correct, Saudi Arabia will start running into trouble within two years. It will be in existential crisis by the end of the decade.

The contract price of US crude oil for delivery in December 2020 is currently $62.05, implying a drastic change in the economic landscape for the Middle East and the petro-rentier states.

The Saudis took a huge gamble last November when they stopped supporting prices and opted instead to flood the market and drive out rivals, boosting their own output to 10.6m barrels a day (b/d) into the teeth of the downturn.

Bank of America says OPEC is now “effectively dissolved”. The cartel might as well shut down its offices in Vienna to save money.

Read the rest here.

As the report puts it:
OPEC now faces a permanent headwind. Each rise in price will be capped by a surge in US output.

  1. oldbrew says:

    Maybe the Saudis should invest some of their billions in US shale oil operations 😉

  2. p.g.sharrow says:

    If they are smart, they will start buying up coal assets. The Obamanation is bankrupting the coal mining companies. This will be a relatively short time thing as the next administration unravels the Green nightmare.. pg

  3. Power Grab says:

    Yeah…somebody with deep pockets is just waiting to snap up a bargain in vilified fossil fuel resources. I hope it’s not those crazy greenies. They’d be as likely to sit on them and let everyone freeze as spit in your eye.

    I keep wondering where all that money went that was sunk into Solyndra.

  4. Consider the present Corporations vs greenies Coal companies declaring bankruptcy selling poor assets to soothe creditors. But keeping the good stuff until it is needed. Railroads doing the same, No bills, lotsa profit later, when the renewables fail. These guys are good. 80 year contracts with utilities when the gas producers raise the price out of sight. Government subsidies for renewables stop when your congresscriter notices all the pitchforks are pointing its way!