On the world stage, Americas oil production pulls this nations economy ahead while stalling countries hostile to America. Last week, OPEC decided it was not going to cut oil production in response to the plummeting cost of a barrel of oil. That was a mistake, writes the Telegraph: Opec has misjudged the threat. As late as last year, it was dismissing US shale as a flash in the pan. Abdalla El-Badri, the groups secretary-general, still insists that half of all US shale output is vulnerable below $85. Currently, the worlds oil producers are in a game of chicken with their economies. If the price of oil drops too low, the competing countries will have to stop production because the cost would not be worth it. At the moment, their cost of producing oil is much higher than that of the United States. The Telegraph again: The fiscal break-even cost is $161 for Venezuela, $160 for Yemen, $132 for Algeria, $131 for Iran, $126 for Nigeria, and $125 for Bahrain, $111 for Iraq, and $105 for Russia, and even $98 for Saudi Arabia itself, according to Citigroup. And how far does the price of oil have to drop before it starts to hurt the U.S. shale fields? $50, according to CNBC. This sets the U.S. in the strategic position to win in the economic struggle for oil domination against hostile nations. For example, Russia is now facing serious economic challenges, and as a result will possibly slow exploration for oil and gas in its Arctic seas. According to the Brookings Institute, the Great Bear estimated the global price of oil would be at $97 dollars as it set its 2014 budget. Once the price of oil slid below $80, however, it headed for economic trouble because oil accounts for 14.5% of Russias GDP. If oil prices remain low, how will Vladimir Putin fund his shadow war in Ukraine? Its a story the late economist Milton Freidman would love: A whole industry rises up under a regulation-happy government and sets the stage for economic security here and abroad. Our analysis? Drill, baby, drill.
Posted on: Wed, 03 Dec 2014 21:04:13 +0000
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