The Saudis are trying to drive the Americans and Canadians out of the oil market. It's a life or death thing for them.
#3 | Posted by Zed at 2014-12-15 12:53 PM
OMG, yesterday I agreed with Larry and today I am agreeing with Zedly.
I do a lot of work in the energy space, and this is the exact reason that we are seeing oil drop this quickly. Shale oil/fracking are unprofitable between $65-70 dollars, depending on where it is pumped, so the Saudis have set the price in that range. This won't stop the existing wells from pumping, but will stop all new drilling of this type. Much like shale and fracking, installed renewables will continue to produce but new projects are all now on hold.
The problem that the OCC members of OPEC have is the weak sisters of the cartel (i.e. Venezuela) can't survive at $60/bbl, so my guess is that OPEC ceases to exist in the next year.
The only "alternative" fuel that is viable at these prices is LNG/CNG, as the trucking industry has figured out over the past couple years.