HOW LOW WILL IT GO?
There is a perception that environmental regulations are a major factor in whether the oil industry increases or decreases drilling. In fact market forces have a much greater impact.
Oil companies will drill only so long as they can sell oil at a profit. The magic number is around $50/barrel of crude. When the price goes below that, drilling takes a breather. Today, at $47 a barrel, many drillers are cutting the number of active rigs.
Some oil exploration companies, however, have gotten themselves in a pickle and have to keep drilling even if that means acting against there own self interest as I discuss in this post.
Related Resources :
Rich, Steven, "Is Oil Exploration Still Attractive At $50 Per Barrel?" , www.drillers.com , March 6, 2017
"Oil closes above $47 as a streak lives on", Bloomberg News, July 3, 2017
Hunn, David, "Gasoline Prices Fall Unexpectedly as Demand, Crude Prices Slip", Houston Chronicle, May 8, 2017
