Factors that affect the price of oil
Saudi's on to put US Independents out!!

1.

As much as we deplore their actions, these are the facts:
Terrorists that are aligned with Al Quada are now striking  American oil-related sites in many parts of the world.
Al Quada has stated its intention of deposing the Saudi rulers. 
Terrorist attacks against oil facilities and workers in the Middle East,
may stem any steep oil price drop.

2.

China increasingly depends on oil, especially imported oil, to meet its energy and industrial needs. Some 21% of its primary energy consumption come from oil, and 36.1% of its oil needs were imported in 2001.

China, which this year (2010) became the world's largest oil consumer. China's oil demand rose to a fresh record high and is 10 percent above the same period last year. Its imports, 60% of its oil needs mostly coming from the Middle East, are expected to rise sharply over the next few years as domestic supplies start to dwindle.

Hungry Dragon

FEAR FACTOR

The law of supply and demand is still in effect!

World demand does and will require more oil than the dangerous and tenuous middle east oil fields can produce reliably at old prices.
Now is the time that the shallow wells in Texas become a very attractive business opportunity.   .
We know where the oil is. It is now profitable to produce it!

We are of the opinion that the price of crude will  fluctuate but not again will one country or one group be able to put you out of business. 

3.

Although oil prices have tumbled by almost half since approaching $150 a barrel. It looks like the price of black gold will rise.

The Numbers tell the Story!
The Railroad Commission states that the number of operators has consistently declined since the boom days of the late 1980's. The number of operators declined from over 16,000 in 1990 to about 7,800 in 2002. The steepest decline in the number of operators was the period from 1990 to 1994. 6,486 today-2005.

The table on the right indicates why this decline occurred and why the number of Orphan Wells in Texas was over 11,000.


What is the profit margin in producing  oil from Texas shallow stripper oil wells?
Every lease is different. Every operator's cost will vary to some degree.

The biggest factor is the price of crude.
OPEC see no economic damage from even higher prices, pointing out that the peaks of the 1970s, allowing for inflation, are equivalent to $95 a barrel in today's (2013) money.

There is plenty of shale oil in the US. It is expensive to produce because of fracking. It can be profitable even at $65 per barrel.
There is plenty of money chasing oil investments.
We'll be pumping in the US & Canada for years to come

Below are the well head crude oil prices from 1986 thru 1999. The  price is adjusted for inflation to 2003 dollars. These prices are from the eia.doe.gov web site

Table 1.  Crude Oil Prices
First purchaser. Domestic average.
          (Dollars per Barrel)
         Year           Dollars                      Adjusted to
         1985 .........    24.09                     2003 Dollars 
         1986 .........    12.51                     17.37                       
         1987 .........    15.40                     
20.94
         1988 .........    12.58                     
16.69
         1989 .........    15.86                     
19.99
         1990 .........    20.03                     
24.07
         1991 .........    16.54                     
19.46
         1992 .........    15.99                     
18.59
         1993 .........    14.25                     
16.37
         1994 .........    13.19                     
15.06
         1995 .........    14.62                     
16.37
         1996 .........    18.46                     
20.13
         1997 .........    17.23                     
18.72
         1998 .........    10.87                     
11.91
         1999 …….    15.56                     16.75
 
   
Avg. price          15.22                      18.02   

See the latest closing price for
West Texas Intermediate Crude

Page 3

Money In Oil, Tyler, Texas 903-561-1554