The Keystone Killer the Enviros Didn't See Coming

When it comes to oil, U.S. is king.  Discoveries in North Dakota and Texas have pushed American oil production past Saudi Arabia and Russia this year.  The new supplies have boosted the economy and dialed down the price of oil everywhere -- gasoline at $3 a gallon anyone?

The price of oil has fallen so low it’s threatening the feasibility of controversial and expensive drilling projects proposed in the Canadian Oil Sands and the Arctic.  West Texas Intermediate, the U.S. benchmark for crude, is going for less than $90 a barrel.  That’s approaching the break-even point for profitability at many of the very wells driving the American oil boom.

“If prices go to $80 or lower, which I think is possible, then we are going to see a reduction in drilling activity,” Ralph Eads, vice chairman and global head of energy investment banking at Jefferies LLC, told Bloomberg News reporter Isaac Arnsdorf.  “It will be uncharted territory.”

At the current price of about $87 a barrel, cheap American crude undercuts many of the most aggressive oil projects under consideration by the oil majors.  About $1.1 trillion of capital expenditures have been earmarked through 2025 for projects that require a market price of more than $95 a barrel, according to a May study by the Carbon Tracker Initiative, a London-based think tank and environmental advocacy group.

The Keystone Killer the Enviros Didn't See Coming