Here was a headline last week that captured my attention: Price drop keeps boom alive. It appeared in the Odessa American and contained these words:
“Lower oil prices do in fact impact absolute economics — no surprise there — but they don’t actually change the relative economics between oil plays,” said Travis Nichols, director of investment banking for Tudor, Pickering, Holt and Company. “And as I look at the Permian, producers are well positioned with among the highest break even points.”
The story reported that “the Permian Basin boasts a number of advantages over other oil production areas — more productive zones of earth, people drilling more productive wells per lease and various well completion efficiencies that companies are finding… That creates incentive to produce in the region even as the rig count may fall and producers may scale back on fringe exploration in favor of proven areas at the core of the oil plays.”
Much of the price increases in oil over the past few years has been due to the weakness of the dollar.
Certainly welcome news for Texans however, the price needs to remain in the $80 per barrel range to keep the industry healthy. Some of the price drop is not really a drop, it is because the dollar has become stronger of late. Much of the price increases in oil over the past few years has been due to the weakness of the dollar.
The actual market value of oil has remained fairly steady, it just has taken more dollars to buy it – the inflation of deflating one’s currency which is a pernicious way to destroy the wealth of American citizens and something we’ve been doing since for the past few White House administrations.
The Saudi’s plan is not so much to flood the market with oil as they’ve done before but instead, to push enough of their very cheap-to-recover oil on the market to dry up Wall Street enthusiasm for funding drilling and fracking. And indeed this headline ran Friday: “Falling oil prices hit shale stocks, force pullback on fracking boom”
Hopefully disruptions will be light in Texas, if not, those who felt so confident about cutting Rainy Day Fund saving in-half will have some explaining to do.
Will the Texas oil play survive declining prices?
Robert Pratt
Here was a headline last week that captured my attention: Price drop keeps boom alive. It appeared in the Odessa American and contained these words:
“Lower oil prices do in fact impact absolute economics — no surprise there — but they don’t actually change the relative economics between oil plays,” said Travis Nichols, director of investment banking for Tudor, Pickering, Holt and Company. “And as I look at the Permian, producers are well positioned with among the highest break even points.”
The story reported that “the Permian Basin boasts a number of advantages over other oil production areas — more productive zones of earth, people drilling more productive wells per lease and various well completion efficiencies that companies are finding… That creates incentive to produce in the region even as the rig count may fall and producers may scale back on fringe exploration in favor of proven areas at the core of the oil plays.”
Much of the price increases in oil over the past few years has been due to the weakness of the dollar.
Certainly welcome news for Texans however, the price needs to remain in the $80 per barrel range to keep the industry healthy. Some of the price drop is not really a drop, it is because the dollar has become stronger of late. Much of the price increases in oil over the past few years has been due to the weakness of the dollar.
The actual market value of oil has remained fairly steady, it just has taken more dollars to buy it – the inflation of deflating one’s currency which is a pernicious way to destroy the wealth of American citizens and something we’ve been doing since for the past few White House administrations.
The Saudi’s plan is not so much to flood the market with oil as they’ve done before but instead, to push enough of their very cheap-to-recover oil on the market to dry up Wall Street enthusiasm for funding drilling and fracking. And indeed this headline ran Friday: “Falling oil prices hit shale stocks, force pullback on fracking boom”
Hopefully disruptions will be light in Texas, if not, those who felt so confident about cutting Rainy Day Fund saving in-half will have some explaining to do.