Glenn linked to a post at the American interest about the price war in oil & the problem for non-Saudi members of the cartel:
The Saudis have the funds to make up for the budget shortfalls cheap oil is foisting upon them, but the rest of OPEC isn’t anywhere near as well prepared. Nigeria, Iran, and Venezuela have all agitated for the cartel to take action, though none have volunteered to be the one to actually make the necessary cuts.
But there is a key line from that piece that not only explains why the supply & demand plan of the Saudi’s have failed but it also says all you want to know about why America is still destination one for the entire world (emphasis mine:
Rather, they’ve been hard at work innovating their way to profitability even at $65 per barrel.
Innovating do tell:
The cost cuts and productivity gains that shale oil producers expect come in three categories…First, there are savings from putting pressure on suppliers of drilling rigs, hydraulic fracturing and other services. Companies have generally been saying they expect reductions of 20 to 30 per cent this year.Second, companies benefit from focusing spending on their most productive assets. “You’re dropping all your worst-performing rigs and worst-performing rig crews and moving the rigs you have to your core areas,” says Randall Collum of Genscape, an energy research firm…Finally, there are productivity gains available from improved techniques.
In other words rather than acting as an Oligarchy that commands & expects to be obeyed would, they make themselves leaner, meaner and smarter to make their rigs profitable even at $65 a barrel.
That is America, that is western civilization it adapts, it innovates, instead of folding.
There is a difference between a culture that simply soaks money from hole in the ground for personal comfort and one made of free men that rewards competition. That is why America is where the best and brightest go.
That is also why the Obama administration is so dangerous & must be stopped, they would convert us from a culture of doers to a culture of beggars.
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