Schwab is projecting $20 to $30 per barrel for 2026. That's not good, I'm all for lower prices but prices need to be between $50 and $60 per barrel to keep the oil companies producing.
Cost of Goods Sold (COGS) drops as cost of fuel (transport and distribution) and interest rates (operating capital cost) drop. Certainly a margin squeeze is coming, but oil is also facing nuclear, natural gas, and coal competition. So margin squeeze is coming regardless and oil companies will drop prices to avoid demand destruction. Sabotage of refineries by Blue State Governors is another separate story.
Cost of development and production of new oil wells and re-activation of older wells also drops with fuel and interest rate drops. Nearly 100% elimination of regulatory restrictions drops rough cost of production by nearly 50% alone (decrease in lawyer and compliance costs), making room for the smaller players who will accept lower margins to play as well. Big guys accept lower margins and maintain revenue or get eaten alive by the unleashed small drillers (and this might be unavoidable anyway as a "natural" long overdue de-consolidation).
Schwab is projecting $20 to $30 per barrel for 2026. That's not good, I'm all for lower prices but prices need to be between $50 and $60 per barrel to keep the oil companies producing.
Cost of Goods Sold (COGS) drops as cost of fuel (transport and distribution) and interest rates (operating capital cost) drop. Certainly a margin squeeze is coming, but oil is also facing nuclear, natural gas, and coal competition. So margin squeeze is coming regardless and oil companies will drop prices to avoid demand destruction. Sabotage of refineries by Blue State Governors is another separate story.
Cost of development and production of new oil wells and re-activation of older wells also drops with fuel and interest rate drops. Nearly 100% elimination of regulatory restrictions drops rough cost of production by nearly 50% alone (decrease in lawyer and compliance costs), making room for the smaller players who will accept lower margins to play as well. Big guys accept lower margins and maintain revenue or get eaten alive by the unleashed small drillers (and this might be unavoidable anyway as a "natural" long overdue de-consolidation).