“Global energy markets have been upended by an unprecedented North American oil boom brought on by hydraulic fracturing,” reports Bloomberg. With crude oil prices collapsing worldwide (at about $70 a barrel today), Russia and the OPEC cartel are the losers, while American consumers and European economies are among the winners.

The winners:

  • With average gas price at $2.77 a gallon, every day American consumers are saving $630 million on gasoline compared with what they paid in June prices.
  • Every penny the price of jet fuel declines means a savings of $40 million for Delta Airlines.

The losers:

  • Many OPEC members need oil prices to stay at or near $100 a barrel to break even: $161 for Venezuela, $131 for Iran, and $98 for Saudi Arabia, for example.
  • Russia’s break-even cost is $105 a barrel. With 50 percent of its revenue from oil and gas, it can no longer relay on the same revenue to rescue its economy already suffering from European and US sanctions.

Meanwhile, “[t]he International Energy Agency estimates most drilling in the [US] Bakken formation — the shale producers that OPEC seeks to drive out of business — return cash at $42 a barrel,” reports Bloomberg. According to one expert cited, US shale oil producers may break even at $40 a barrel or less.

Oil at $40 Possible as Market Redraws Politics From Caracas to Tehran, Gregory Viscusi, Tara Patel and Simon Kennedy, Bloomberg
Saudis Risk Playing With Fire in Shale-Price Showdown as Crude Crashes, Ambrose Evans-Pritchard, U.K. Daily Telegraph
As Oil Prices Plunge, Wide-Ranging Effects for Consumers and the Global Economy, Steven Mufson, Washington Post