The Real Cause Of Low Oil Prices

The Real Cause Of Low Oil Prices: Interview With Arthur Berman

The price of oil will recover. Opinions that it will remain low for a long time do not take into account that all producers need about $100/barrel. The big exporting nations need this price to balance their fiscal budgets. The deep-water, shale and heavy oil producers need $100 oil to make a small profit on their expensive projects.

If oil price stays at $80 or lower, only conventional producers will be able to stay in business by ignoring the cost of social overhead to support their regimes. If this happens, global supply will fall and the price will increase above $80/barrel. Only a global economic collapse would permit low oil prices to persist for very long.

http://www.zerohedge.com/news/2015-01-07/real-cause-low-oil-prices-interview-arthur-berman

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