The full article is here-> http://www.daily-times.com/story/opinion/columnists/2016/10/29/fine-opec-oil-and-ours-who-wins/92440428/
This is an excerpt of the article ”
Has the oil price and market share war ended with a Saudi Arabian win? Or, as some fund managers and speculators argue, has Midland won? We are now in a trading range high of $50 per barrel for West Texas Intermediate.
Looking back two years, Wall Street, the oil and gas industry and its trade associations got it all wrong. I was a minority of one in New Mexico with my OPEC analysis of a low of $23 to $28 per barrel which was realized earlier this year. Once again there is triumphalism and hubris about winning the war against OPEC.
What is it all about? If OPEC agrees to freeze production at August output that would put OPEC between 32.5 and 33 million barrels per day. In 2013, OPEC was below 30 million. If they “freeze” it will be at 2.5 million more than early 2014 while our production had dropped almost 1.5 million.
In other words, OPEC oil expanded its market share and more significantly has displaced our oil here at home in the American market by nearly one million barrels per barrel. This is a double win for OPEC and Saudi Arabia: more of their oil imported into our market and fewer barrels of our oil produced, which is the loss of rigs and jobs and a painful downturn.
The Permian Basin and its Delaware Basin extension into New Mexico has become the new North Slope Alaska of the 1970s. It is there that drilling rigs and well completions will be re-activated next year. The “breakeven” price is lower because of geology and cost-cutting service contracts. The downturn contracts, however, will expire and non-Haliburton contractors will ask for more. Margins will tighten as costs increase. But North Dakota has leveled off and Eagle Ford is not the Permian.”