The World Bank released their big commodity markets outlook late last week, which shows how the average per-barrel cost for U.S. shale projects to be economic has come down a lot.
The lower break-even costs stem from a suite of factors, like technological improvements to how much service companies charge, which fell when oil prices tumbled.
Why it matters: That steep downward slope is one reason why U.S. drillers, especially in the Permian Basin, has become a persistently strong competitor to Saudi Arabia and other big producers.
- In addition, the attractive economics of shale could sap industry interest in developing Arctic offshore and onshore regions that the Trump administration wants to make available — regions with potentially vast resources but that also require lots of capital to explore and develop.
Yes, but: "While shale companies are expected to continue to achieve efficiency gains, they are starting to face cost inflation for some inputs, especially skilled labor," the World Bank notes.