[Marxism] Fwd: Oil Price Fall: Saudi Arabi targets US Shale Oil, Iran, Iraq, Russia | Informed Comment

[Louis Proyect via Marxism]

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So how does this all relate to peak oil? It seems to me that if shale 
oil can't turn a profit, it will increase the demand on conventionally 
drilled oil and hence accelerate its exhaustion. I think the idea that 
oil is about to disappear any time soon is simplistic but the tendency 
for desperate violence over control of diminishing resources does 
confirm in its way the peak oil hypothesis. In any event, I think that 
peak oil is a much more serious problem. On Thanksgiving day, we had a 
friend of my wife from Istanbul and her husband over for dinner (we ate 
hindi, as the Turks call the bird.) Her dissertation was on competition 
for water in the Middle East, the Euphrates specifically. Her comment: 
declining water supplies in the region have more to do with the wars 
than Shi'a/Sunni conflicts.





It is clear that among the major losers in the fall in the price of 
Brent crude petroleum from $115 a barrel last summer to about $75 a 
barrel today are Russia, Iraq and Iran. Petroleum sales are 50% of 
Russia’s income, and are also central for Iran and Iraq.
But the big loser will likely be shale oil producers and prospectors in 
the US, who probably cannot make a profit if the price falls into the 60s.


http://www.juancole.com/2014/11/targets-shale-russia.html
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[Marxism] Fwd: Oil Price Fall: Saudi Arabi targets US Shale Oil, Iran, Iraq, Russia | Informed Comment

[DW via Marxism]

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The other big loser is Venezuela which has an even higher percentage that
Russia for it's budget.

Saudi's vote against cutting production had to do with trying to dry up oil
that is being fracked in the US and other countries. It does this by making
the profit margins fall to zero or negative. This results not in fracking
wells shutting down but in putting a halt investing in new ones.

Here's a quote from an energy observer just on tar sands (which includes
Venezuela and Canada):

There are two primary methods to move oil: by pipeline, which is cheap,
and by rail, which is expensive. That cost differential is make-or-break
for a tar sands business. The break-even price of tar sands oil is around
$100 per barrel if transported by rail, according to Anthony Swift, a staff
attorney at NRDC (which publishes *OnEarth*). Tar sands oil sells for $75
on a good day. So producers have to find a savings of $25 per barrel
somewhere in order to make it worth the investment.

Basically the Canadians are going to lose their shirts over the next 6
months. But that's tar sands. What about fracking?

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.
--
http://www.npr.org/2014/11/04/361204786/falling-oil-prices-make-fracking-less-lucrative

So the aim of low priced oil benefits the cheaper producers and that's not
anywhere in N. America or Russia.

And this doesn't really have a thing to do with the now in-disrepute theory
of peak oil as it shows that the amount of oil (while having an absolute
limit by definition) available is *totally* dependent on price. Which is
true for every extractive commodity.

David
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