A Return to Higher Oil Prices Is Not Straight-Forward: American Association of Drilling Engineers, Midland Texas, 19 April 2016



    We met via our mutual friend Bobby Gray about 5 years ago. I look forward to reading your publications but I am having difficulty receiving your full commentary. I click on the “underlined” title of the article, but cannot see the first several pages and when I print, only see/receive the pages 2 or 3 to the end of the article or only see the first few pages, not the complete comments. Please advise.
    Thank you, Marshall Ashmore

  • Joe Schreiber

    Hi Art,

    Thank you for providing us with clear, logical, and unbiased analysis of the oil market.

    I don’t understand why you would compare shale breakeven prices to the oil price required for producing countries to balance their fiscal budgets. They seem like apples and oranges to me. A middle eastern producer is still profitable below his government fiscal breakeven price. He could make it up on volume and has an incentive to increase production. A shale producer, however, will loose money below his breakeven price and the rational decision would be to reduce high cost production. He can never make it up on volume. It seems to me the breakeven price for all countries should be price vs. cost to produce, not price vs. government fiscal balance. Looking at it another way, what is the breakeven price for the US to balance its fiscal budget?

    Joe Schreiber

    • Arthur Berman


      I chose to equate fiscal break-even prices for producing countries with shale break-even prices because this is a form of overhead. If we exclude the purely fiscal portion of a producing country’s cost, then we should also exclude a shale companies G&A, interest expense and taxes.

      If I knew the operating costs and taxes for producing countries, I would gladly compare pure costs of production with shale companies and not consider overhead (G&A) for either. Since these expenses are not available to me for countries, I reluctantly chose to compare the closest thing I could as like costs.

      The U.S. government does not produce oil and gas so I don’t think your final comment is relevant.

      Thanks for your insightful comment,


  • I am really interesting your articles.it sounds the same thinkings on the oil price with me.

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