[deMolay]

I find it interesting that the Saudi's are claiming that they now need $70/barrel to break even, is there any factual evidence to support that statement? http://search.japantimes.co.jp/cgi-bin/ ... 628a1.html

[Homesteader]

Maybe they are referring to their state budget. . .

[Schmuto]

If this is, in fact, the case, then what does that say?

OPEC estimates that $75 a barrel oil is needed for oil exploration and production to become profitable.

If this is the case, then are we not done? Is it not, essentially, over?

If you look at the graph of oil price over time, you see that we were well below 75 prior to 2005.

So, in a mere five or eight years, we have gone from - making a profit and exploring at 25 or less a barrel . . . to . . . needing price to stay above 75 in order to even have money to explore.

If that's not a clear indication that we're at peak, what the hell would be?

Oh yeah, and if that's not enough, the KSA has also announced it is exploring in water now.

[rangerone314]

If this is, in fact, the case, then what does that say?

OPEC estimates that $75 a barrel oil is needed for oil exploration and production to become profitable.

If this is the case, then are we not done? Is it not, essentially, over?

If you look at the graph of oil price over time, you see that we were well below 75 prior to 2005.

So, in a mere five or eight years, we have gone from - making a profit and exploring at 25 or less a barrel . . . to . . . needing price to stay above 75 in order to even have money to explore.

If that's not a clear indication that we're at peak, what the hell would be?

Oh yeah, and if that's not enough, the KSA has also announced it is exploring in water now.

Well the KSA are a bunch of lying (#*&%s but the question is are they lying about needing to stay above 75 or lying about how much oil they have left and can pump.

[deMolay]

From the Article.

An equally important factor is that easily accessible oil is getting harder to find. OPEC estimates that $75 a barrel oil is needed for oil exploration and production to become profitable. Iran cites a $50 price as the minimum. Whether the much disputed point of "peak oil" has been reached or not, new demand is growing just as the cost of finding new oil becomes more expensive.

[hardtootell-2]

I find it interesting that the Saudi's are claiming that they now need $70/barrel to break even, is there any factual evidence to support that statement? http://search.japantimes.co.jp/cgi-bin/ ... 628a1.html

from the article- this gem

The International Energy Agency said investment in oil and gas exploration and production will fall 21 percent in 2009 and that oil producers have put off $170 billion worth of investment, blaming falling prices, slumping demand and tight credit.

Demand from China and other rapidly developing countries is expected to push global oil demand to 113 million barrels a day by 2030. Previously resilient non-OPEC production is also expected to decline this year. All this means that there is a clear risk that the fine balance between supply and demand will tip. The bottom line is that $75 a barrel for oil may seem high today, but the year after tomorrow it will seem like a real bargain.[/color]

[Plantagenet]

Obama's new carbon tax will depress the level of US oil exploration and close US refineries, requiring the US to import more oil and putting more upward pressure on global oil prices.

[TheDude]

"Heavy sour crack whore."

For OPEC members with ambitious economic or social programs, $60 a barrel oil is a break-even point for their constrained budgets.

What, they can't just kill more dogs and cats?

The picture in the U.S. is mixed. Overall, U.S. demand is down to 18.8 million barrels a day, almost 2 million barrels below demand in the first quarter of 2007. But within the general picture, there has been falling demand for distillates, mainly consumed by industry, which reflects the general industrial gloom, along with steady to robust demand for gasoline. Some oil economists say the market is reacting to expectations of rising demand from motorists as the summer driving season approaches.

This is correct. Much of the slackening in demand has been in mundane things like petrochemical feedstocks and residual fuel oil; YOY gasoline demand hasn't gone anywhere. This is terrible for refiners but will have no impact on drivers anytime soon, until the fallout catches up with them that is, or increased utility bills lead to them reducing driving.

By fallout I mean refineries shutting down and placing the strain on those that remain, or product having to be imported at a surcharge. Combine that with increased consumption elsewhere and the onset of alt-A and Option arm resets and I'd say if you haven't bought a bike yet you're stark raving not paying attention.

[americandream]

I guess the issues are: Is OPEC ripping off the consumer or is its trading stock now in the $70 range? Any thoughts?

[Armageddon]

World production will never reach 90 mbpd. We are on the decline now. With the looming global economic collapse, PO will remain hidden by your average Schmoe.

[heroineworshipper]

Yeah. How on Earth can they break even at the rock bottom price of 70? It should be at least $200.

[Plantagenet]

Yeah. How on Earth can they break even at the rock bottom price of 70? It should be at least $200.

All in good time.

[Armageddon]

$70-75.00 is perfect for them. They are raking in lots of dough and it buys just a little more time on the economy ( very little time ).

[cipi604]

The PARTY is on at this prices... people have money to spare!

[Daniel_Plainview]

I find it interesting that the Saudi's are claiming that they now need $70/barrel to break even, is there any factual evidence to support that statement? http://search.japantimes.co.jp/cgi-bin/ ... 628a1.html

This data was published by the Bank of Kuwait in July, 2006:

Oil Break-Even Prices

Bahrain $40
Kuwait $17
KSA $30
U.A.E. $25
Oman $40
Qatar $30
oil sands $33 (Canada)

Source = Nat'l Bank of Kuwait

Seeking Alpha
----------------------------

The problem with KSA's statement that the new breakeven price is now $75 is that we simply cannot trust KSA.

[americandream]

So opinion is divided between them ripping us off and trading stock inventory (no more in the oil tank) issues. I'm none the wiser although common sense tells me that oil inventory is most probably behind the global economies difficulties at the moment.

[DantesPeak]

If I may offer an alternative explanation: I think the Saudis are saying here that they need $70 oil to run their economy. I don't think the marginal cost of newly reworked fields is yet anyway near $70, but maybe $30 to $40, but that's just a WAG.


Keep in mind domestic use of oil within Saudi is rising rapidly. It is sold at a great discount to the world's market value. Therefore what they lose internally they need to make up externally. Whether they can or will is another question.

[Sixstrings]

If this is, in fact, the case, then what does that say?

OPEC estimates that $75 a barrel oil is needed for oil exploration and production to become profitable.

If this is the case, then are we not done? Is it not, essentially, over?

If you look at the graph of oil price over time, you see that we were well below 75 prior to 2005.

So, in a mere five or eight years, we have gone from - making a profit and exploring at 25 or less a barrel . . . to . . . needing price to stay above 75 in order to even have money to explore.

If that's not a clear indication that we're at peak, what the hell would be?

Oh yeah, and if that's not enough, the KSA has also announced it is exploring in water now.

Good point, Schmuto. This target price "needed to make a profit" will continue to escalate, and then we'll have peak oil effects regardless of how much oil is in the ground.