Is the OPEC playing chicken? It is clear that the new $70 – $80 oil price is not here to stay, and it is a move made by OPEC countries upon seeing the United States’ future economy.
The United States oil industry is currently producing oil for less than $80 per barrel. The lower selling price will certainly hurt smaller, unprepared players in the market. That said, the more established OPEC countries are content with the current price because they are producing oil for $15 per barrel.
Chad Brownstein, an oil and energy expert, claims that the OPEC countries – said to be part of the movement to keep oil price in check at around $70 per barrel – understands the true power of the US economy. With the correct regulations and proper infrastructure, the United States can increase its oil production capacity to 3,000 fields as well as lower the production cost to match that of the more established OPEC countries. When that happens, the United States will be an energy-independent country and OPEC countries will see a steep drop in market share.
Furthermore, Brownstein said that the drop in oil prices is actually an opportunity for the United States. It is the extra boost needed to make the government adjust its policies on oil export. It will also help speed up the creation of policies governing oil-related infrastructure as well as development of key pipelines across the country to further support its production.