The Production of Oil and the Price of Oil

In picture 1 you can see the oil production of the international oil cartel (OPEC). You can see that Saudi Arabia can produce 10 million barrels of oil per day, far ahead from everybody else. Russia and the United States, who have similar production capacities, are not included.

Image Oil Production by Country

Crude Oil Production.JPG

In the second picture you can see the cost of producing a barrel of oil in each country. You can see that Saudi Arabia, with a cost of 10 dollars per barrel, is again the lucky one.

Image 2

Cost Per Barrel

The above two pictures explain why we often see sworn enemies leaving aside their differences in order to attack Saudi Arabia. Saudi Arabia is a huge problem for other oil exporting countries.

Moreover Muslim countries like Egypt, Turkey and Pakistan, who have almost zero oil, are threatening Saudi Arabia that they will support socialists or Islamists in Saudi Arabia if the Saudis do not pay them huge amounts of cash, or if they do not give them free oil.

I must say that the countries of the international oil cartel are either socialist or Islamist, and therefore very corrupt, and their corrupt politicians have to pay the civil servants that support them with the revenues from their oil exports.

That’s why the fiscal break even prices of oil are extremely important. The fiscal break even price is the minimum price of oil required to pay all the civil servants. If there is poverty, and if the civil servants are not happy, an enemy of the country can intervene in order to cause an “Arab Spring” or a “Spring”, or whatever you want to call it.

Therefore if the production cost of a barrel of oil is 1 dollar, and the country sells 10 barrels of oil, and it has a public sector which costs 100 dollars per year, the country must sell each barrel at 10 dollars in order to receive the 100 dollars which are required to pay the civil servants. It does not matter that a barrel of oil costs 1 dollar. If the country sells at 2 dollars per barrel, wage cuts will be required, and an Arab Spring could follow.

In picture 3 you can see the fiscal break even price per barrel of oil for each country. You can see that Saudi Arabia needs to sell at approximately 100 dollars, because she needs to pay huge amounts to Egypt, Turkey, Sudan and Pakistan, in order not to attack her, while Qatar and Kuwait, with their small populations, can survive with a price of 50 dollars per barrel.

 

Image 3

Fiscal Break Even Prices

You can also understand how important is the production of oil from shale rock in the United States for these countries, because the American companies can produce a barrel of oil from 40 to 90 dollars, depending on how easy or difficult a specific shale deposit is.

Therefore it is very difficult for the international oil cartel to sell at a price above 40 dollars, because the frackers will step in at a price of 40 dollars, and that’s why you see sworn enemies leaving their differences aside in order to attack the United States and its huge production of shale oil and shale gas.

Remember that the Islamist and socialist dictators of the Muslim World, together with the Communist dictators of Latin America, supported the Communist Jewish Bernie Sanders who had promised them to ban the American production of shale oil and shale gas.

 

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