OPEC is about to crush the U.S. oil boom

[yallerdawg]

Source: Bloomberg by Grant Smith

After a year suffering the economic consequences of the oil price slump, OPEC is finally on the cusp of choking off growth in U.S. crude output.

The nation’s production is almost back down to the level pumped in November 2014, when the Organization of Petroleum Exporting Countries switched its strategy to focus on battering competitors and reclaiming market share. As the U.S. wilts, demand for OPEC’s crude will grow in 2015, ending two years of retreat, the International Energy Agency estimates.

Saudi Arabia, the main architect of OPEC’s new strategy, will have a budget deficit of 20 percent of gross domestic product this year, the International Monetary Fund estimates. While the kingdom has been able to tap foreign currency reserves and curb spending to cope with the slump, financial assets may run out within five years if the government maintains current policies and prices stay low, the IMF said Wednesday.

Less wealthy OPEC members have even fewer options. The threat of political unrest is mounting in the “Fragile Five” of Algeria, Iraq, Libya, Nigeria and Venezuela, according to RBC Capital Markets LLC.

More at: http://www.bloomberg.com/news/articles/2015-10-20/after-year-of-pain-opec-close-to-halting-u-s-oil-in-its-tracks

[FLPanhandle]

1. It's not just the US oil boom

High oil prices made more alternative energy solutions economically viable.

The question is can they keep prices low in the long term? If so, they keep market share. Once prices go up again....

[yallerdawg]

2. We'll see if American energy independence...

is just about the petroleum industry or true independence?

OPEC thinks we are still addicted. No matter the source.

If we still need oil as a fundamental factor of our economy, will we the people be OK with continued reliance on fossil fuels?

Or will we finally realize, as gas prices go back up, we need to do better?

[JRLeft]

3. This will cause support for Keystone XL to grow. Americans are ignorant on the issues.

[yallerdawg]

4. You're in the 'more oil' fatalism camp.

I agree.

Spielberg missed it by a mile!

[FBaggins]

5. They've been saying that for over a year now

So far, the greatest damage has been done to OPEC itself. Damaging some tiny drillers (that will only get gobbled up by the big players ready to expand production again at even lower prices than before) isn't that large an impact compared to the pain they're suffering.

[Blue_In_AK]

6. They're killing Alaska's economy,

but we need to get off oil anyway. I really wouldn't mind if Exxon, BP, and ConocoPhillips left tomorrow and took all the Texas and Oklahoma oil guys with them (and 3/4 of our legislature). It would be hard but worth it.

[karadax]

7. The domestic oil infrastructure is in place and waiting.

It doesn't matter what OPEC does. Once oil prices reach a certain dollar amount to become profitable again the closed wells will reopen. The holes are already drilled. Fracking extraction will only get more efficient as time passes too.

We will never see $80 or higher oil again.

[daleo]

8. And renewables continue to drop in price as well

The Saudis are not really in as powerful a position as is generally assumed.

[roamer65]

9. The Saudis have now started a price war with the Russians.

Reason being that the biggest consumer of oil, the Chinese, are now importing more oil from Russia than from Saudi Arabia.

It's gonna get very interesting, very soon.