Bob Wallace has shown one part of the oil equation, i.e. oil production costs.
Another part is break-even price by country, which reflects the extent of a country's dependence on oil revenues.
Comparing that with current and future oil price tells one how much of a structural problem a country has.
Libya, Nigeria, Venezuela, Iran, Iraq Russia and Saudi Arabia have production costs well below current sale price. But their Governments need a sale price of $100 + to balance the books, i.e. they are going bust, either borrowing, or if they have any, running down their cash reserves.
The same basic components apply to Natural Gas
Everyone with an ounce of rational thought in their brain knows that any sustained increase in crude and natural gas prices results in a boost to US shale production and a boost to renewable energy investment. Many oil producing countries will fail to create an economy independent of oil within the next few years. They will go bust. So will over-exposed investors and lenders. People will starve. It will be messy and violent.
Someone please prove I am wrong.
Libya, Nigeria, Venezuela, Iran, Iraq Russia and Saudi Arabia - I'm not sure that their governments need $100/barrel prices in order to stay afloat. Certainly not all. If countries can sell enough oil for a smaller profit then they can 'survive'.
Venezuela, for example, has a breakeven price of about $28/barrel. They could either sell a small number of barrels at $100 or a lot of oil at $40 and gain the capital they need to cover debts. The problem is that there appears to be enough oil that can be sold for less.
I suspect that at this point in time when it's so obvious that we are going to see a massive oil demand decrease over the next 10 to 20 years countries like Saudi Arabia want to move a lot of oil (at an acceptable price) in order to earn what they can. There's got to be a juggling act to keep the price as high as possible without allowing more volume/supply into the market.
There's going to be a lot of economic disruption as oil fades from importance. Countries that have little other to sell and who have inadequate governments are going to be in major pain. I think we're going to see civil unrest, riots and rebellions in the countries who have least prepared.
I think the world is going to be facing some very difficult times over the next few decades. Some countries are going to experience economic crashes as they lose their oil incomes. But the larger problem is likely to be climate refugees as people will be forced to abandoned those places where they cannot live due to heat and drought.
Look at how we're already creating Fortress America and Fortress Europe with right wing governments working to keep people from crossing their borders. The UK is cranking up the drawbridge over the moat.
During my lifetime we've fought the ideological/political wars. We battled out naziism and communinism. We're still working on democracy vs. dictatorship. Those who are young now are likely to see their battles over whether we allow others to live where we live or whether we shoot them when they get close to our walls.
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Sorry, I'm suffering from a bit of Donnie Depression this morning. The United States is in a terrible fix with no relief in sight.