the 'tin foil hat' crowd is of the opinion that the real long term 'break even' price of oil production vs oil consumption is in the $35 / barrel range. Production costs in the middle east, Nigeria and other areas that pump 'light sweet crude' are allegedly on the order of $10-15 / barrel. Production costs in areas that have 'heavy crude' like Argentina and Russia are on the order of $30 / barrel. Production costs of making synthetic oil from coal via the Fischer-Tropsch process are on the order of $35 / barrel. The 'tin foil hat' crowd attributes prices higher than these levels to short term 'fear factors' i.e. Israeli war, Katrina refinery damage, Alaska pipeline shutdown.
Additionally, the 'tin foil hat' crowd is of the opinion that the Saudis and other OPEC members are waking up to the facts that A). America might actually be serious about reducing it's dependence on FOREIGN oil, either via new discoveries like the Jack 2 deep well or by removing political / environmental obstacles to develop known oil reserves in Alaska and off all three US coasts ... and B.) at current world oil prices, non-OPEC members like Russia and Venezuela are getting very rich and powerful despite their much higher 'heavy crude' production costs thus threatening OPEC's ability to effectively control the world's oil supply. Further concern exists due to Russia's bypassing of OPEC via the construction of pipelines to Europe, by Venezuela's exclusive supply contracts with China etc. Thus there is reason to believe that OPEC members are now bumping up oil production in order to pull a 'WalMart' on the Russians and Venezuelans before a sizeable piece of the world's oil market (and a sizeable piece of OPEC's ability to control overall supply thus prices) is effectivel 'lost' to them.
If this has any basis in reality, we should expect to see further and significant declines in the world price of oil in the near future.



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