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Originally Posted by flamesaresmokin
None of these giants will pull out becuase oil is down to $85....especially when the price of gas will never dip below .95/litre again no matter how low the oil goes. Bottom line is, the only thing affected by the drop is the multi billion dollar profits. They will just start turning multi million dollar profits if this trend continues.
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What does the price of gas have to do with oil?
Multi-million dollar profits do not represent an adequate rate of return on the capital invested.
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Shell is going to completely pull out of the area if the price hits $85? After spending billions and billions they are just going to tuck tail and run. Maybe put a halt on expeansion or something like that, but I really doubt a complete pull out.
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Shell's Albian project is break-even at $75. Let's say oil becomes $70. Why would you bother digging the stuff out, only to lose $5 on each barrel?
Again, it's about rate of return. Break-even is useless to Shell's bottom line. So is anything that's below conventional oil rate of return.