Break even point on a barrel of crude

2Driver · Oct 30, 2014

Looks like we can win this price war as long as we can keep finding oil in the US to meet our needs.

A fringe benefit is that it is putting a lot of our enemies in the red

Country Break Even

US $45

Saudi Arabia $89

Iraq $114

Iran $130

Kuwait $44

Qatar $71

Venezuela $161

Libya $185

Russia $105

waterhorse · Oct 30, 2014

I worked in the oilfields after high school, good job and economy then. I say drill baby drill!!

Skinny Tire AH · Oct 30, 2014

2Driver said:
Looks like we can win this price war as long as we can keep finding oil in the US to met our needs.

A fringe benefit is that it is putting a lot of our enemies in the red

Country Break Even

US $45

Saudi Arabia $89

Iraq $114

Iran $130

Kuwait $44

Qatar $71

Venezuela $161

Libya $185

Russia $105

This is how you win the war on terror. No money...No Jihadist. Just like Reagan won the cod war, break em!!

waterhorse · Oct 30, 2014

And Frack too!!!

OCMerrill · Oct 30, 2014

nganga said:
This is how you win the war on terror. No money...No Jihadist. Just like Reagan won the cod war, break em!!

Reagan actually cut a deal with the Saudi's to keep oil prices super low so Russia could no longer afford an arms race. Lack of money = lack of interest.

CampbellCarl · Oct 30, 2014

waterhorse said:
I worked in the oilfields after high school, good job and economy then. I say drill baby drill!!

I agree....as long as said drilling is on my family land in Montana.............

waterhorse · Oct 30, 2014

Absolutely. And you let me be your minerals management specialist.

CampbellCarl · Oct 30, 2014

waterhorse said:
Absolutely. And you let me be your minerals management specialist.

Sorry, pretty sure that is handled by the Department of the Interior, Bureau of Indian Affairs......seems we're too stupid to negotiate on our own.....

Afterall, we did well on the Manhatten Island deal.......

waterhorse · Oct 30, 2014

So no mineral rights? Dang it!

pronstar · Oct 30, 2014

There's a tipping point...fracking can't sustain prices at $80/barrel indefinitely, so they'll stop fracking if the price stays there or lowers, which reduces supply and drives up prices.

But between fracking and natural gas, we have hundreds of years worth of cheap energy that we should be exploiting, and using to grow our economy.

ChevelleSB406 · Oct 30, 2014

2Driver said:
Looks like we can win this price war as long as we can keep finding oil in the US to met our needs.

A fringe benefit is that it is putting a lot of our enemies in the red

Country Break Even

US $45

Saudi Arabia $89

Iraq $114

Iran $130

Kuwait $44

Qatar $71

Venezuela $161

Libya $185

Russia $105

Now is this break even on cost of pulling it out of the ground? If found on a website or article could you link it so I can read the criteria, some of these numbers don't sound right to me. I am not an expert, but I do work in the industry.

TX Foilhead · Oct 30, 2014

2Driver said:
Looks like we can win this price war as long as we can keep finding oil in the US to met our needs.

A fringe benefit is that it is putting a lot of our enemies in the red

Country Break Even

US $45

Saudi Arabia $89

Iraq $114

Iran $130

Kuwait $44

Qatar $71

Venezuela $161

Libya $185

Russia $105

I believe those numbers are what it would take to run their current budgets, not what it costs them to get the oil out of the ground. The number I've been seeing is $60 a barrel in the Bakken, Eagle Ford, and Permian Basin where there is already some infrastructure and they are getting better at getting more oil out of each well.

The Saudis have planets of cash to make up the difference for a while, the others not so much. It's certainly an interesting game of poker everyone is playing.

ChevelleSB406 · Oct 30, 2014

TX Foilhead said:
I believe those numbers are what it would take to run their current budgets, not what it costs them to get the oil out of the ground. The number I've been seeing is $60 a barrel in the Bakken, Eagle Ford, and Permian Basin where there is already some infrastructure and they are getting better at getting more oil out of each well.

The Saudis have planets of cash to make up the difference for a while, the others not so much. It's certainly an interesting game of poker everyone is playing.

Agreed, the American numbers don't look that off to me, the Saudi numbers would be a little surprising if it was the break even point on extraction, sticking a straw in the ground and collecting what shoots up doesn't cost much

Also a break down by field would add some validity to the US number as obviously pulling oil from the shale fields is gonna be a little different cost than your Texas sweet light and Eagle Ford. The more fun game is what it costs to turn it into gasoline, which is what my employer is a specialist in. The Venezuelan swill is pretty nasty stuff.

Abc123 · Oct 30, 2014

pronstar said:
There's a tipping point...fracking can't sustain prices at $80/barrel indefinitely, so they'll stop fracking if the price stays there or lowers, which reduces supply and drives up prices.

But between fracking and natural gas, we have hundreds of years worth of cheap energy that we should be exploiting, and using to grow our economy.

Agreed. Unfortunately these options probably won't be utilized until the petrodollar is dropped, foreigners won't lend us anymore money, The IMF is tapped out after bailing us out, China's energy consumption demands slow down because we don't have money to buy their products and the US is desperate for industry.

I also think Warren Buffet was brilliant to purchase the BNSF. Who needs a Keystone Pipeline? Just buy the 2nd largest railroad and roll it down the tracks.

ChevelleSB406 · Oct 30, 2014

Just read more about the Saudi break even point they are quoting. Since its a "national" oil company, they are factoring in all kinds of public works and unemployment benefits which drives up that price. Imagine the US break even point if it was factoring in the oh so "generous" public spending.

pronstar · Oct 30, 2014

NiceGuyEddie said:
I also think Warren Buffet was brilliant to purchase the BNSF. Who needs a Keystone Pipeline? Just buy the 2nd largest railroad and roll it down the tracks.

The greens are now going after rail tanker cars, and have pushed through legislation that requires expensive equipment retrofits "to make rail safer" despite the fact that shpping by rail is already extremely safe.

Abc123 · Oct 30, 2014

pronstar said:
The greens are now going after rail tanker cars, and have pushed through legislation that requires expensive equipment retrofits "to make rail safer" despite the fact that shpping by rail is already extremely safe.

Oh I believe it. Anyway for their organizations to make more revenue for themselves. If they weren't into being green for profit and greed, they'd understand that railroads emit far less pollution than than long haul trucks. A single train replaces about 300 trucks on the highway.

koenig · Oct 30, 2014

For Russia, the mid east, and other enemy countries, the majority of their budgets are tied to oil. U.S and Canada, not so much. The break even numbers for Canada and the USA are a little higher but still lower then the rest of the world.

2Driver · Oct 30, 2014

TX Foilhead said:
I believe those numbers are what it would take to run their current budgets, not what it costs them to get the oil out of the ground. The number I've been seeing is $60 a barrel in the Bakken, Eagle Ford, and Permian Basin where there is already some infrastructure and they are getting better at getting more oil out of each well.

The Saudis have planets of cash to make up the difference for a while, the others not so much. It's certainly an interesting game of poker everyone is playing.

Yes its based on current budgets according to the article.

http://www.cnbc.com/id/102123934

So what I have been trying to figure out is, what do you buy if crude goes to $70-ish knowing it will return to 9x at some point in the not to distance future

Caydens Cat · Oct 31, 2014

TX Foilhead said:
I believe those numbers are what it would take to run their current budgets, not what it costs them to get the oil out of the ground. The number I've been seeing is $60 a barrel in the Bakken, Eagle Ford, and Permian Basin where there is already some infrastructure and they are getting better at getting more oil out of each well.

The Saudis have planets of cash to make up the difference for a while, the others not so much. It's certainly an interesting game of poker everyone is playing.

Bingo! $60 is the northern number before folks pull back. This recent 20% cut in pay can KMA!

Paul65k · Oct 31, 2014

This is weird........On CNBC they have been saying that the cost to bring out a barrel of oil in the US is $40 - $75 a barrel......which sounds pretty close to the numbers here. The interesting part is that all the experts are saying that the cost for Saudi Arabia is still only $10 - 15 a barrel so they can keep the supply high regardless of what happens with the higher cost countries.

All the other numbers seem to be consistent with the other countries, Venezuela, Russia, etc... but all the commentary is about how the Saudi's can play this game all the way into the gutter.............makes sense actually as they didn't have to pay anyone for the land or the rights to drill.....I would tend to believe the experts from the major Brokerage and Commodity houses research teams. :headscratch:

TBulger · Oct 31, 2014

I've always heard at less than 75 bucks, the old wells through out Ca, start to shut down. Have no idea if this is true though.

TX Foilhead · Oct 31, 2014

The Canadians will be one of the first ones to have problems, they lack good infrastructure to get the oil out of Alberta right now. Keystone XL would help because we have the refineries that can process the heavy tar sands oil on the gulf coast.

The shale boom will go on for a while no mater the price, the minerals are leased and the engineering has been done so there's no point in not drilling since it's not a huge expense compared to what has already been spent. That will end at some point, if the prices stay low they won't continue to develop theses new projects.
L
The Saudis and others in the Middle East would like to see franking stop while the Russians would like to get rid of the dollar so they're working with the Chinese to trade in other currency's. That's a bigger deal than the Saudis flooding the market.

If we had some true leadership we would probably cut back on buying so much stuff from China and start sending all the gas we can to Europe. The Russians don't have the technology to exploit the reserves they have and won't be any help to them if they don't have someone to to steal the technology from.

Paul65k · Oct 31, 2014

TX Foilhead said:
The Canadians will be one of the first ones to have problems, they lack good infrastructure to get the oil out of Alberta right now. Keystone XL would help because we have the refineries that can process the heavy tar sands oil on the gulf coast.

The shale boom will go on for a while no mater the price, the minerals are leased and the engineering has been done so there's no point in not drilling since it's not a huge expense compared to what has already been spent. That will end at some point, if the prices stay low they won't continue to develop theses new projects.
L
The Saudis and others in the Middle East would like to see franking stop while the Russians would like to get rid of the dollar so they're working with the Chinese to trade in other currency's. That's a bigger deal than the Saudis flooding the market.

If we had some true leadership we would probably cut back on buying so much stuff from China and start sending all the gas we can to Europe. The Russians don't have the technology to exploit the reserves they have and won't be any help to them if they don't have someone to to steal the technology from.

True leadership..............That's rich!! :lmao

RodnJen · Oct 31, 2014

TX Foilhead said:
The Canadians will be one of the first ones to have problems, they lack good infrastructure to get the oil out of Alberta right now. Keystone XL would help because we have the refineries that can process the heavy tar sands oil on the gulf coast.

The shale boom will go on for a while no mater the price, the minerals are leased and the engineering has been done so there's no point in not drilling since it's not a huge expense compared to what has already been spent. That will end at some point, if the prices stay low they won't continue to develop theses new projects.
L
The Saudis and others in the Middle East would like to see franking stop while the Russians would like to get rid of the dollar so they're working with the Chinese to trade in other currency's. That's a bigger deal than the Saudis flooding the market.

If we had some true leadership we would probably cut back on buying so much stuff from China and start sending all the gas we can to Europe. The Russians don't have the technology to exploit the reserves they have and won't be any help to them if they don't have someone to to steal the technology from.

Define "stuff"?

nowski · Oct 31, 2014

Here are your global gas prices.

http://www.globalpetrolprices.com/gasoline_prices/

I've been to Venezuela and when I was there I've never seen so many of our 70's gas guzzlers in one country...

Abc123 · Oct 31, 2014

TX Foilhead said:
The Canadians will be one of the first ones to have problems, they lack good infrastructure to get the oil out of Alberta right now. Keystone XL would help because we have the refineries that can process the heavy tar sands oil on the gulf coast.

The shale boom will go on for a while no mater the price, the minerals are leased and the engineering has been done so there's no point in not drilling since it's not a huge expense compared to what has already been spent. That will end at some point, if the prices stay low they won't continue to develop theses new projects.
L
The Saudis and others in the Middle East would like to see franking stop while the Russians would like to get rid of the dollar so they're working with the Chinese to trade in other currency's. That's a bigger deal than the Saudis flooding the market.

If we had some true leadership we would probably cut back on buying so much stuff from China and start sending all the gas we can to Europe. The Russians don't have the technology to exploit the reserves they have and won't be any help to them if they don't have someone to to steal the technology from.

The US needs serious trade reform with China. I don't think the average American realizes how bad of an idea it was to lett China into the WTO.

Carlson-jet · Oct 31, 2014

The fact North America is disposing of the most critical resource known to mankind at a rate that is irreplaceable in desperate times is worrisome to me.

I have always enjoyed the thought of depleting the rest of the worlds resources before using ours at any cost.

Oil in the long run, will be worth more than gold to the masses.

Old Texan · Oct 31, 2014

RodnJen said:
Define "stuff"?

Check the labels on merchandise on the shelves and in your cart......I read it as he's referring to a huge imbalance in trade. Are you seeing it differently?

Old Texan · Oct 31, 2014

Carlson-jet said:
The fact North America is disposing of the most critical resource known to mankind at a rate that is irreplaceable in desperate times is worrisome to me.

I have always enjoyed the thought of depleting the rest of the worlds resources before using ours at any cost.

Oil in the long run, will be worth more than gold to the masses.

I've heard that theory all my life and it's constantly countered with, "The US needs to gain energy independence." If the actual reserve numbers are correct, we supposedly have 400+ years of reserves. Don't know how that number is reached or even if it's true.

I would think though, that we will come up with honest alternative energy sources well before 400 years run off the clock. With that in mind, let's use our own and quit building the economies of countries that basically bring more bad than good to the US.

boatdoc55 · Oct 31, 2014

Old Texan said:
I've heard that theory all my life and it's constantly countered with, "The US needs to gain energy independence." If the actual reserve numbers are correct, we supposedly have 400+ years of reserves. Don't know how that number is reached or even if it's true.

I would think though, that we will come up with honest alternative energy sources well before 400 years run off the clock. With that in mind, let's use our own and quit building the economies of countries that basically bring more bad than good to the US.

X2 and who gives a rats azz if we run out in 50 years, most all of us aint going to be here!!!

Boozer · Oct 31, 2014

I can see our dependency on crude oil and other natural resources declining significantly over the next 10-20 years.

Within the next 20 years there's a very good chance the majority of the vehicles we see on the roads will be either electric or super efficient gas powered vehicles getting in excess of 80mpg.

As solar technology continues to evolve and become more affordable and efficient more homes in this country will be powered by solar energy.

That being said there's a good chance those 400+ years will turn into reserves that will outlast the human race.

This current surplus won't do much about the Russians due to their plans to no longer use the dollar for trade. However, this could still be a blessing considering our economy needs a crutch. QE3 is going away and rates will rise. Cheap crude will IMO help the economy adjust to the increased interest rates that we'll experience as a result of the fed's funny money going away.

It will be interesting to see what all this does the U.S. Housing market. I believe we're already bubbled in many major US markets and this will likely prove it.

boatnam2 · Oct 31, 2014

I have been working in a oil refinery 26 years and i remember 3 years into getting the job all the guys i worked with told me be careful buying a house, solar/electric power cars are here and refineries in the US will be gone within 5 years. So here I'am a few years from retiring and i will say gasoline cars aren't going anywhere anytime soon, and if they did are they going to build electric planes and a million other things oil help to make? Im not sure why we have payed huge amounts of dollars for a barrel of oil to build a slew of countries up that are getting close to affording to start a nuclear war, with out our money they are still building sand castles, Thank are greedy government for that.

TPC · Oct 31, 2014

The world is full of oil.

Break even point on a barrel of crude

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