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By Robert Rapier on Oct 15, 2014 with 28 responses

Saudi Arabia Still Calling the Shots

The US Shale Oil Boom

There have been a lot of stories over the past few years about the implications of the US shale boom. To review for those who might have been living in a cave for the past 5 years, the marriage of horizontal drilling and hydraulic fracturing (fracking) has reversed 40 years of declining US oil production and created a shale oil and gas boom.

As amazing as it would have seemed a decade ago, US oil production is increasing at the fastest pace in US history. In the past 5 years US oil production has increased by 3.22 million barrels per day (bpd). The overall global oil production increase during that time was only 3.85 million bpd, meaning the US was responsible for 83.6 percent of the total global increase over the past 5 years.

US Oil Production 1965 through 2013 Fracking

This resurgence in US oil production has had a number of implications. One has been that US oil imports have declined. Thus, even though the US has an oil export ban in place (which has had the impact of discounting US crude relative to globally traded crudes), global oil supplies have nevertheless increased as oil exporters sought other outlets to replace the declining US business. This has weakened the pricing power of OPEC.

Shale Oil Economics

The shale boom was enabled by high oil prices. The cost of production for shale oil is higher than for most onshore conventional oil, and therefore high prices were needed to encourage shale oil production. How high? Estimates vary, but a couple of years ago the marginal cost for shale oil was estimated to be around $100/bbl. That cost has been declining as drillers implemented improvements like multi-pad drilling, and today is probably ~$80/bbl. With the price of West Texas Intermediate hovering around $80/bbl, the market price of crude oil in the productive shale regions has slipped below $80/bbl (due to the need to transport it to market, it generally trades at a discount to WTI).

What does this mean? If the price of oil falls below the break even level for an extended period of time, marginal producers will begin shutting down and lower cost producers will likely reduce their spending on new exploration and drilling. The current expansion of US oil production would then stall sooner than expected.

Who would benefit if this happened? In the long run, Saudi Arabia, other OPEC producers, and Russia. The world’s other major oil producers have watched US oil production grow, and it looks like they might finally be ready to do something about it.

Saudi’s Three Options

When you think about it from Saudi Arabia’s perspective, they have three choices. They can choose to do nothing, in which case oil prices might weaken as long as long as US production continues to grow. At the rate the US is going, we threaten to overtake Saudi Arabia as the world’s largest oil producer within the next few years ago. A few years ago I would have been incredulous at this notion, but at this point I can’t say that’s impossible.

Saudi can also convince OPEC producers to cut production in order to support current oil prices. This will force them to give up some revenue, but again, if US oil production continues to increase OPEC may be forced to keep cutting oil production for the next few years in order to maintain global oil prices. As with the previous option, this benefits US oil producers.

Their third option does not benefit US oil producers. Saudi could attempt to reduce the price of oil until shale oil production starts to become uneconomic. Saudi Arabia has been accused of using oil in the past as an economic weapon. In the present case, it would mean short term pain for OPEC, but if they can stop the momentum of the shale oil boom then OPEC would regain some of its pricing power. Saudi Arabia reportedly needs oil prices between $80 and $90/bbl to balance its budget, and if they can short-circuit the US shale boom they will have more influence in ensuring they can set the price where they want.

This third option looks increasingly like Saudi Arabia’s strategy. Reuters reported this week that Saudi Arabia has been quietly telling the oil market that it would accept oil prices as low as $80 for up to two years. If this is the case, and Saudi Arabia manages to hold oil prices at $80, the result may be lower US oil production in future years than would have otherwise been the case. Saudi Arabia would once more be entrenched as the most powerful country when it comes to setting the price of oil.


As I have argued in the past, I view it as a serious national security concern when a country could bring the US economy to its knees overnight. Saudi Arabia still wields significant pricing power, but that power has weakened in recent years. If they win a price war with US shale oil producers, consumers will benefit at the pump while the war wages, but at a cost of putting more long-term pricing power in the hands of Saudi Arabia.

Whether we do it with increased oil production, lower oil consumption through higher fuel efficiency and alternative energy – or some combination, we need to make sure our energy policies do not put the future of the US economy back in the hands of countries that do not have the best interests of the US at heart. For some additional perspective on this issue, see my colleague Jennifer Warren’s article The OPEC Oil Market Gambit.

Link to Original Article: Saudi Arabia Still Calling the Shots

By Robert Rapier. You can find me on TwitterLinkedIn, or Facebook.

  1. By Forrest on October 15, 2014 at 8:37 am

    It’s not only fracking, they want to deter investment in biofuel as well. The Oil Cartel was accused of the same approach during 70′s when much attention to energy crisis focused country on biofuel production/technology. Brazil continued to produce ethanol from sugar cane even if the process was uncompetitive per long term economic benefit. The U.S. allowed processors to go bankrupt. As your earlier post informs, it is against U.S. best interest to apply export ban controls to our domestic oil producers. Better to allow the industry to mix and match specifics of industry capability, crude oil character, market, etc to function to peak economic efficiency. Not good to hamstring industry per biases of backward thinking. Same thinking skills gleefully support income tax revenue and high corp tax. To much of the decision making of voting public rely on emotion and jealousy.
    Would it be possible (I know it would be dangerous) to establish federal cooperative agency with mission to conserve nonrenewable natural resources per long term sustainability and maximum revenue? You once reflected back on oil industry short sightedness per wasteful exploitation of valuable oil reserves with little profit to show for future worth. For example tax domestic crude and natural gas from conventional low cost production. Have a sustainable low production plan. Biofuel is currently in a double dangerous position per the hit on RFS anticipated change in production requirements of cellulosic ethanol. Investor’s have to reevaluate the return vs the change in rules. Funny, how this all came to a head at crutial funding point of cellulosic ethanol expansion. Canada should get in on the strategy as well. The other players in energy market all attempt to maximize return on valuable domestic energy resources. One reason biofuel is hated so much, is that it is produced entirely upon separate competitive and uncontrollable production fuel stream. It works to foil control of the market per small independent business. International control/manipulation becomes less effective. Biofuel dampens favorable price swings as consumers can easily dial up competitive product use.

    • By Optimist on October 15, 2014 at 9:58 pm

      Well, maybe $80/bbl kills cellulosic. That would be a nice two birds with one stone…

      • By Forrest on October 16, 2014 at 7:02 am

        If your strictly an oil proponent/benefactor it would be good. I listened to review of business report; the low crude prices hammered oil stocks. They claimed the condition would last several years. They also said the economy would benefit. Weren’t you the guy critical of cellulosic low supply, claiming it was a phantom fuel? Now, that they in production your still upset? It is true that every dollar the consumer saves is a dollar out of fuel supply wealth. Louisiana State University study found ethanol reduces gas prices 78 cents a gallon. Ouch. A consumer savings of more than $100 billion annually.

        • By Optimist on October 16, 2014 at 3:17 pm

          Several years, eh? These are the same guys who always hasten to add “past performance is no guarantee of future results” to all their projections, right?

          We’ll see how long they keep producing. KiOR certainly won’t be producing anything anytime soon. Vinod Koshla will get to buy back his plant via a different company for pennies on the dollar, with special thanks to the US taxpayer…

          “Louisiana State University study found ethanol reduces gas prices 78 cents a gallon. Ouch.” Sponsored by USDA? Same crowd who have been producing questionable calculations on corn ethanol? No pain here…

          Early days. Stay tuned.

          • By Forrest on October 16, 2014 at 4:15 pm

            Several years is just an educated guess by business analysis who specializes in the sector. It matters not to me.

            Bio fuel companies are very diverse and have competing technology. If kior was successful they would be bumping ethanol as well as petrol.

            Their have been other studies on economics of ethanol that confirm a very positive cost contribution to consumer, taxpayer, and economy. But, you post confrontational to ethanol, as if you want gasoline to beat ethanol? I sure don’t look at it that way. Ethanol makes gasoline a better fuel and can do it cheaper than any other additive. What’s not to like?

            • By Optimist on October 16, 2014 at 5:21 pm

              Ethanol makes gasoline batter? In what way? Making it hygroscopic can’t be it. Eventually having a water layer separate out can’t be it. Making separate transportation necessary and more expensive can’t be it. Requiring car makers to spend more to make cars “flex fuel” can’t be it. Raising the volatility can’t be it.

              And if ethanol was so economically attractive it would not need the heavy hand of Uncle Sam to force it down the throats of consumers.

              So more to the point: what’s to like about this boondoggle?

            • By Forrest on October 16, 2014 at 7:37 pm

              You have to know by now hygroscopic character of ethanol is an attribute or why would gasoline supply utilize ethanol to dry out water laden tank storage? How to solve the omnipresent moisture corrosion problem? Yes, add alcohol or more alcohol. This the solution for winter driving motorist way before alternative fuels.
              Flex fuel cars require a reflash of prom program. That’s it. But why the reported expense? EPA tests to confirm the program meets EPA requirements are expensive. It’s just intergovernmental funding to hit up private business where ever possible. True, still an expense to auto companies to the tune of couple hundred per vehicle. Motorist given a choice chose ethanol. Independent gas stations are experiencing a big competitive advantage with E15. Often times they replace slow moving mid grade. Advocacy groups keeping track of shyster DC political corruption and well paid lobbyist have accounted 1.3 billion dollars spent on crony capitalism efforts to diss ethanol and influence Capital Hill politics. This was a six year expenditure, but still an amazing effort to crush a competitor whom they claim is toothless and weak.

            • By Optimist on October 16, 2014 at 8:03 pm

              Nice try, Forrest!
              Why would Big Oil resist including ethanol if it is such a wonder cleaner? Or do they prefer to use more expensive products?

              Earth calling: motorists most certainly do not choose ethanol given the choice, or there would be no need to try to convince us that E15 is safe. Why is E85 selling so slowly? If E85 sales were modestly higher, there would be no need for the EPA to lie trough its teeth, and pretend E15 is safe in order to keep corrupt farm state politicians happy.

              Want to talk about “well paid lobbyists”? Let’s talk about Big Ag!

              Clever to mention mid grade too: mid grade is an answer to a question nobody is asking. Of course it doesn’t sell.

            • By Forrest on October 17, 2014 at 6:55 am

              Oil does like E10, as they benefit from the mix. They will fight tooth and nail on additional ethanol as that cuts into revenue stream. Agriculture is a bit bigger than ethanol, but international oil companies can put them to shame. E15 is an attractive fuel choice to motoring public where available. E85 has low availability as compared to unleaded and only approved per the limited flex fuel vehicles. Also, per the St Louis study that claimed distributors and branded stations routinely jacked up ethanol markup 2x. The report commented that it appeared the ploy was to make E85 less competitive and make unleaded fuel a economically better deal. This is a marketing strategy. I do think E85 best value would be to offer true alternative fuel choice when unleaded supply suddenly jacks up price. Also, the recent development of extremely high toque, compression engines that Cummins entered into market place makes the fuel a great alternative to heavy and expensive diesel applications.

      • By TimC on October 16, 2014 at 11:33 am

        Without subsidies or mandates, anything < $150/bbl kills cellulosic. And $150/bbl kills the whole global economy, including cellulosic.

        Cellulosic biofuels are delicate orchids that can only grow in a cozy little climate-controlled hothouse made of government policies. Poet, Abengoa, Dupont, Cool Planet, KiOR, and a few others have been granted modest little plots within that hothouse to grow their orchids. Many people peer into the hothouse, see those orchids growing, and think, "The age of fossil fuels is over. The age of renewables is here. And not a moment too soon…" But fossil fuels are the only thing keeping the hothouse warm. If anyone tries to open the door of the hothouse even a little, a chorus of voices screams, "Shut the door! Don't mess with the RFS! You're killing the bioeconomy!" So the hothouse remains closed and warm and irrelevant. The DOE and the USDA keep promising us that some day one of those orchids will mutate into a hardy, fast-growing field crop. So far though, no luck. So people just keep staring into the hothouse. For some reason, the sight of the growing orchids gives them hope, makes them feel like at least someone is doing something.

        • By Optimist on October 16, 2014 at 3:31 pm

          That’s a pretty good summary Tim!

          Don’t lose sleep over $150/bbl, though (or $450/bbl): it just means you have to learn Arabic, in order to effectively communicate with your new boss. Other than that, he’s just like your current boss…

  2. By Optimist on October 15, 2014 at 9:57 pm

    I dunno, Rapier.
    We seem to do a pretty good job of screwing up the US economy without the help of any outsiders. Consider the banking sector, where too-big-to-fail was a big cause of the 2008 crisis. Now, thanks to Uncle Sam’s generous help, we have turned too big into even bigger yet. All while destroying several million middle class jobs and kicking millions of middle class homeowners out on the street. Crony capitalism is great, once you’re rich.

    I don’t think the Saudis or OPEC have a snowball’s chance of getting their hands on our economy. Even if the keep oil prices at $80/bbl and every fracking well shuts down, the genie is out of the bottle. As soon as oil prices pick up, fracking can resume. Besides, $80/bbl will be a strong motivator for frackers to cut costs further.

    I seriously doubt that OPEC will agree to go below $80/bbl. They’re too fat and lazy for that, thank goodness.

    Also, just what would you have Uncle Sam do? Tax oil imports to keep oil prices artificially high? Restrict import to achieve the same? Yeah, I’d love to see my congressman try to vote for any of that.

    I say: let’s keep a (relatively) free market (relatively) free. The free market’s creative destruction is not a beautiful process to behold, but it works.

    • By Robert Rapier on October 15, 2014 at 10:08 pm

      I kind of agree with you. I think it would take less than $80/bbl to really make a dent, and there is going to be a lot of dissent within OPEC even at $80. Venezuela is already screaming.

    • By Gene_Frenkle on October 16, 2014 at 11:49 am

      The global savings glut caused the GLOBAL financial meltdown. The global saving glut was caused by an extended high oil price that resulted in trade imbalances. Fracking is good for the Saudis because it decreases trade imbalances with the US which is good for the global economy. What is bad for the global economy is Europe’s obsession with climate change and thus they refuse to frack and energy prices remain high and Russia benefits.

      The real threat to the Saudis is Tesla and the 2016 Chevy Volt. Once the average consumer begins purchasing EVs because they are the superior product we will see oil demand fall in the US and the US will become a natural gas based economy. The US can even convert natural gas to diesel and kerosene if the natural gas/oil price differential is great enough.

      • By Optimist on October 16, 2014 at 3:28 pm

        The average consumer pays ~$40/week for fuel (go look it up). Fuel prices caused a savings glut? On what planet was that?

        Federal subsidies for housing, and lax lending standards encourage by Uncle Sam (who was keen to have a photo-op with all the minorities now owning houses) caused the savings glut. The problems is Republicans and Democrats (each trying to outdo the other: “I can be even dumber than you!” – cue applause from the base), not Saudis or OPEC.

        We’ll see what EVs achieve. If the bulk of the power comes from coal, it is hard to imagine that the environment would benefit on the whole. Ditto for public health. Nonetheless, it is always good to have an alternative.

        I suspect a better alternative is a CNG vehicle running on biogas. But we’ll see.

        • By Gene_Frenkle on October 16, 2014 at 7:14 pm

          Don’t get me wrong, the policies that promoted real estate investment didn’t help and in the US the fact that Florida and Nevada are swing states that had the biggest bubbles created an incentive for the Bush administration to view the bubble through rose colored glasses.

          I actually wanted to know what you thought about CNG vehicles and methane produced from corn. Does the process require less energy than corn ethanol? Transporting methane through pipelines would appear to make corn methane more energy efficient. ICE vehicles can run on methane with some minor modifications and a new tank. A home filling station for $500 coupled with bifuel autos with a small CNG tank would make CNG vehicles economical and the infrastructure could grow as demand dictates.

          • By Optimist on October 16, 2014 at 7:54 pm

            Major advantages that biogas have over ethanol:
            1. More than just sugar gets fermented, typically 50% of the available substrate.
            2. The product self separates from the fermentation broth, so no costly and energy-intense distillation.
            3. Related to 2: the product doesn’t accumulate and inhibit fermentation.
            4. Fermentation adds value (converting waste into fuel) rather than destroy it (converting food into fuel).

            Now if only you could get some farm state senators interested…

            Why put corn into the fermenter? It will run on pretty much anything organic, including poop, cow poop, sludge, landfill waste, etc.

            Main challenge: the biogas needs some cleanup, as it is 40 – 50% CO2, contains some H2S and some siloxanes. The easiest solution is probably a water scrubber.

            Interesting tidbit: a few years back there were just as many CNG filling stations around the country as E85 pumps, in spite of the former getting no support from a certain heavy-handed drunk.

            Honda used to sell a home compressor for filling your CNG Civic from your home’s natural gas supply (Phil, I think it was called). If you could get your hands on one of those…

            • By Gene_Frenkle on October 16, 2014 at 8:34 pm

              Thanks for the reply. I have an interest in the Caribbean where high energy prices are a big problem outside of Trinidad. Once Cuba is a democracy I hope that they go straight to methane from sugar. Do you think that in 20 years Cuba could be powered by sugar methane for transportation and electricity, electricity from burning bagasse, and solar? I would think HVACs and hot water heaters will become more efficient. I just hope they don’t get hooked on Venezuelan oil with so much sugar potential and Brazil doing most of the hard pioneering work in sugar for energy.

            • By Forrest on October 17, 2014 at 7:46 am

              I’m sure Optimist will return comment. Let me just add, look to Brazil solutions with sugar cane. They have much experience and expertise for getting maximum value from the crop. Currently they are introducing sorghum to increase off season yield. They utilize bio digestor within the process of ethanol both sugar and cellulose. If you want to generate power, i would focus as much as possible on roof top solar. Yes, NG turbine would be a good complimentary power to solar and the bio digestor could make a contribution, but good luck with the attempt to meet entire needs. Hawaii has the same problem. Coal is very capable per your needs, only the clean coal per gasification and combined cycle generation. Also, nuclear is a clear winner. Problem with both they don’t perform well with solar, unless the peak power needs can be leveled with battery car charging and AC operation.

            • By Forrestf on October 17, 2014 at 7:27 am

              CNG is gaining popularity as alternative transportation fuel. Conversion cost and compliance cost are expensive, so the fleet vehicles and tractor trailers the prime candidate as they consume large quantities. Picken’s Plan claimed this many years ago. We should be utilizing NG domestically as it cost much more to export as compared to oil products, coal, and ethanol. Phil was disruptive technology. Environmentalist, oil, gas stations, and the rest had their knifes out to kill the progress. Regulations conformance costs were ridiculously expensive (you can’t be to safe). This is modern crony capitalism of U.S.. If you have disruptive technology to the business as usually, you will make no friends and need deep pockets to pay politicians, lobbyist, media, and support fellow bed mates. It’s sad state of affairs. My engineering background and history of following the corn ethanol progress, a study of observing much of this attack. It’s not the America taught within history books of fair competition and invention. Now, step one is to run to federal political power to gain favor.
              Bio gas is very attractive, but not a competitor to oil or ethanol. It’s gaining in popularity per the need of controlling GW emissions. Probably the most powerful tool available. Yes, corn and cellulosic ethanol utilize the process and have gained much carbon rating and energy rating. Ethanol is rated 2-1/2 times better than gasoline for energy return per up to date analysis well to wheel. Municipal sewage is in process of adapting as well as some new process that produces ethanol. Farms will be required to manage animal waste per the technology. One farm north of me has installed this equipment and operates a cat diesel generator 24×7 selling power. Converting bio gas to NG pipeline quality adds costs, the reason most chose to forgo.

    • By DerWilleZurMacht on October 30, 2014 at 10:27 am

      Optimist speaks the truth. You nailed the cause of the recession — “savings glut” my ass. Prosperity is built upon the back of savings. Gene_Frenkle below has swallowed the Keynesian Pill HARD.

      • By Andy Mather on January 4, 2015 at 2:53 pm

        I think savings glut referred to savings held by OPEC governments not US citizens.

    • By BOBinBrooklyn on January 7, 2015 at 3:07 am

      I agree that the Fracking genie “is out of the bottle”. We will not forget how to Frack. Once you learn how to Frack you do not go back! But if the government put a $10 a barrel oil import tariff on oil, the estimated $29 billion a year would go into the U.S. Treasury, rather than the Treasuries of Saudi Arabia, Iran, Russia, etc. (The $29 Billion comes from importing 8 Million Barrels Per Day (MBPD) (18 MBPD usage less 10 MBPD domestic production) times $10 a barrel equals $80 million a day times 365 days a year equals $29 billion a year.)

      As I write this, early Jan. 7th, West Texas Intermediate fell below $48 freakin’ (frackin’?) per barrel. A $10 a barrel oil import tariff would mean oil was STILL below $58. That $58 is STILL 49.5% below oil’s high of $115 back in June 2014. And the tariff could be phased out as the oil price begins its inevitable rise, whenever that is.

      The Highway Trust Fund is bankrupt, since the Federal Gasoline Tax has not been raised in about 30 years. $29 Billion a year could be put into the Highway Trust Fund and ensure our roads and bridges remain intact.

      See my article: “A Tale of Two Oil Prices” at:

  3. By Forrest on October 16, 2014 at 6:53 am

    Jennifer Warren post suggested the Saudis may be attempting to influence partners in OPEC to pony up and share productions cuts to shore up price. Saudi Arabia historically has done the heavy lifting and getting tired of suffering the brunt of cost. This couldn’t have come at a worst time for Venezuela as their socialist economy is tanking. High oil profits were great tool for tyrants to purchase control and popularity. Lol Chavez was all full of vitriol for those evil capitalist countries that make socialism less attractive. The lower price of crude oil is suppose to sway new oil well development. Since fracking wells have short lifespan this will soon effect supply.

  4. By Joseph Hall on October 16, 2014 at 10:14 am

    Isn’t it about time we got off this fossil fueled roller-coaster that does nothing but enable and empower our enemies?

    The age of fossil fuels is over. The age of renewables is here. And not a moment too soon…

    • By Miles Harding on October 19, 2014 at 6:51 pm

      Definitely necessary, and as soon as possible.

      This transition starts at home. It is the citizen that makes this happen, not by government edict, but by individual choice.

  5. By Forrest on December 2, 2014 at 7:54 am

    Environmentalist must be overjoyed with S.A. exploits to bankrupt smaller business men of the U.S. fracking boom. The ones with low financial resources and in need of continuous supply of revenue to pay loans. Exxon probably benefiting from elimination of competition, as well. What the pipeline obstruction couldn’t accomplish, our Arab “friends” did. Probably did a number on cellulosic ethanol investment as well. The low cost of energy will improve our short term economy, but at a cost to a better future. This seems to be the calm before the storm. It would be good for country if the smaller players within this fracking boom could likewise cut back to most profitable production and maintain viability for future needs of competition and supply. It may be in our best interest to help tune up the petrol side with infrastructure and efficiency choices to emerge stronger. Who’s going to tell the solar and wind zeolots their dream is on hold per eventual need of country to cut deficit spending? Capital is a limited valuable national resource.

  6. By Forrest on January 5, 2015 at 7:40 am

    We know it’s option #3 now and concerns of U.S. oil production losses upon oil prices at $80 barrel long ago realized. What Gene Frenkle posted below with savings or trade glut has an economic validity. For example, trade imbalance with China not as troubling to international wealth because the country is busy expanding their economy, making jobs, and actively trading in goods and services. Compare that with OPEC nations that simply pump and refine natural resource and limit the supply to achieve twice the natural market value. The Saudis do little upon trade of goods and services, yet harvest a large portion of international wealth. This sucking sound makes the work of improving world economy tough and acts as a dragging anchor to progression. All nations attempting to fill void and push economic sails with cheap printed money, all but the oil producing countries of which some with such enormous anchors of political opportunism and agenda have an advantage. Saudis influence upon trading is to boost collectibles of art, antique autos, rarities, etc. Not much economic engine force within this game of uber rich. Also, the last U.S. economic hemorrhage, now well understood to be government policy and politics tinkering. Democrat forces full of new found racial statistic of home ownership and mortgages pushed regs and quasi federal agencies to award home ownership to growing class of non-qualified. Mortgage market responded to the new commandments per dicing and chopping up financial mortgages with good paper and shored up eventual losses with derivatives. Then they ran to get pat on back from political leadership. Rating agencies also, fell onto the blade per fortunes and good job ratings as they too, went along with status quo political machinery that decides winners and losers. This endeavor kicked off in Clinton years, supported in Bush years and exploded to reality at terminal point. This will happen again as so many looking to D.C. political machinery to create artificial wealth and change the rules of attainment. In closing will urge energy policy to #1 continue the production of non crude oil energy development that is economically relevant. #2 thwart corporate crony capitalism from attempting to stall biofuel and biomass solutions of small business. #3 progress with CNG fueling of semi trailer fleet as this is in national interest to free up diesel fuel and escalating cost to markets. This is much more efficient use of natural resources, but goes against strategy of oil corporations that do not like to have competing fuel choices at the pump. They produce NG and oil and don’t want the supplies to fight against each other per consumer needs. Meaning better for them to export NG per LNG terminals and keep diesel fuel cost at maximum levels. They hate E85 and ethanol for this very reason. They consumer can affect choice and influence markets. Saudis hate shale oil and U.S. oil companies hate biofuel.

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