Quote:
Originally Posted by sexyxe
But won't that then repeat this cycle? They stop producing shale oil until it is economically viable, once fuel prices increase enough, they then start pulling more of it up, decreasing the price of oil again... Rinse and repeat?
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Theres alot of investors in the American shale business that are hurting big time at the moment. You only have to look at some of the companies on the Australian Market whos shares have more than halved. The american shale business wasnt even making money when oil was at $100 a barrel (they were being funded by alot of debt), thus imagine how good they are going now. In addition, the payoffs for shale wells comes short and sweet ( these wells are productive at start, but die rather quickly compared to your tradional oil well). Theres a good chance that over 75% plus, of US production is losing money at the moment, and once you shutdown a shale oil well, its a huge cost to get it running again. Any sane investor wont be returning to this situation for a long time. Smart investors out there would be buying 44 gallon drums, and throwing a bit of petrol in there each week. Come latevthis year, or early next year, petrol will be staying above $1.60 a litre.