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Fact or Fiction: $200 Oil
Is Almost Here
Photo Credit: ConocoPhillips
What’s at stake?
• Currently, 66% of the price
of gasoline is derived from
the cost of crude oil
• According to a Gallup
p...
What’s at stake?
• It’s estimated that $200 oil
would cause gas price to
rise above $7 per gallon
• A price that high woul...
What’s at stake?
• The price of everything
from food to clothing
would rise
• Global trade would slow
• “Staycations” woul...
This is not a future anyone wants …
… so what’s around the
bend?
$200 oil is mere fiction
American shale oil is a game-
changer
• 5 times as
much oil as
previously
thought
• Bakken and
Ea...
$200 oil is mere fiction
• The Gulf of Mexico has
reversed its production
decline
• New oil sources have been
found in Tex...
$200 oil is mere fiction
• Canada has the third
largest oil reserves in the
world
• Production is expected to
grow from 1....
$200 oil is mere fiction
• A production cut is
rumored because of
increased oil output from
North America
• Billionaire Sa...
This is good news, but …
… there is more to the
story.
The return of cheap oil is fiction, too …
… in fact, the days
of cheap oil
might be gone for good.
Oil prices likely stuck over $100
• Costs are upwards of $10
million per well
• Very high initial decline
rates mean new w...
Oil prices likely stuck over $100
• ExxonMobil’s massive
Kearl oil sands project cost
C$12.9 billion to build
• Breakeven ...
Oil prices likely stuck over $100
• Deepwater Horizon added
to the industry’s costs
• Day rates for deepwater
drilling rig...
Oil prices likely stuck over $100
• Rumored production cut is
needed to keep oil over
$100 per barrel
• Production of many...
… IF you are positioned to
profit from it. This is what you
need to know!
All of this is actually good news for you …
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$200 Oil: Fact or Fiction?

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Will crude prices increasing sharply the past few months, are we approaching an environment where $200 oil is the new normal?

Published in: Business, News & Politics

$200 Oil: Fact or Fiction?

  1. 1. Fact or Fiction: $200 Oil Is Almost Here Photo Credit: ConocoPhillips
  2. 2. What’s at stake? • Currently, 66% of the price of gasoline is derived from the cost of crude oil • According to a Gallup poll, $5.30 per gallon is the “tipping point” at which most Americans would feel forced to make changes Economy-crushing gas prices Photo credit: Flickr/AgentAkit
  3. 3. What’s at stake? • It’s estimated that $200 oil would cause gas price to rise above $7 per gallon • A price that high would have significant ripple effects throughout the American economy Economy-crushing gas prices
  4. 4. What’s at stake? • The price of everything from food to clothing would rise • Global trade would slow • “Staycations” would be the norm • Our highly mobile society would become immobilized This is more than just some pain at the pump
  5. 5. This is not a future anyone wants … … so what’s around the bend?
  6. 6. $200 oil is mere fiction American shale oil is a game- changer • 5 times as much oil as previously thought • Bakken and Eagle Ford are becoming household names Source: Vanguard Natural Resources
  7. 7. $200 oil is mere fiction • The Gulf of Mexico has reversed its production decline • New oil sources have been found in Texas’ legacy Permian Basin, which is now believed to hold the world’s second largest oil field New life is breathed into legacy plays Photo credit: BP
  8. 8. $200 oil is mere fiction • Canada has the third largest oil reserves in the world • Production is expected to grow from 1.8 million barrels per day in 2012 to 4.5 million barrels per day by 2025 Don’t forget about Canada Courtesy Cenovus Energy Inc.
  9. 9. $200 oil is mere fiction • A production cut is rumored because of increased oil output from North America • Billionaire Saudi Prince Alwaleed bin Talal warns that his country must diversify its economy OPEC is worried Photo credit: Flickr/Gamma Man
  10. 10. This is good news, but … … there is more to the story.
  11. 11. The return of cheap oil is fiction, too … … in fact, the days of cheap oil might be gone for good.
  12. 12. Oil prices likely stuck over $100 • Costs are upwards of $10 million per well • Very high initial decline rates mean new wells need to be drilled just to maintain production rates Shale oil wells are expensive to drill Photo Credit: ConocoPhillips
  13. 13. Oil prices likely stuck over $100 • ExxonMobil’s massive Kearl oil sands project cost C$12.9 billion to build • Breakeven costs typically $40-$70 per barrel, leaving little to no margin if oil prices fall Oil sands are expensive to develop Photo credit: Devon Energy
  14. 14. Oil prices likely stuck over $100 • Deepwater Horizon added to the industry’s costs • Day rates for deepwater drilling rigs are in excess of $400,000 per day Deepwater both dangerous and expensive Photo Credit: U.S. Coast Guard
  15. 15. Oil prices likely stuck over $100 • Rumored production cut is needed to keep oil over $100 per barrel • Production of many fields is declining • Middle East in constant turmoil OPEC has set $100 as the floor for oil Photo credit: Flickr/Arenamontanus
  16. 16. … IF you are positioned to profit from it. This is what you need to know! All of this is actually good news for you …

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