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Production Cost of Oil Across the Globe - 12/8/15

Oil has been trading around forty dollars per barrel in recent weeks.  The presumption among many is that oil producers must be losing tons of money with prices so low.  Some are, some aren’t.  As reported by CNNMoney, in the UK, it costs more than fifty two dollars to produce a barrel of oil.  In Brazil, it costs nearly forty nine dollars.  In Canada, it costs around forty one dollars a barrel, which has been just about break even. 

America is more efficient in producing oil than all of these nations.  Production costs average thirty six dollars a barrel, below the recent trading price.  All of these findings come from Rystad Energy’s UCube database, which encompasses information from approximately sixty-five thousand oil and gas fields around the world.  While America’s oil fields are productive, there are places where the cost of producing oil is even cheaper. 

Producers in both Saudi Arabia and Kuwait can pump a barrel of oil for less than ten dollars, and the Iraqis can produce oil for about eleven dollars a barrel.  Oil prices plunged during the latter half of last year.  The drop came after OPEC, which includes some of the largest oil producing countries in the world, decided to continue supplying large amounts of oil, perhaps to drive high cost producers out of the market. 

Anirban Basu, Chariman Chief Executive Officer of Sage Policy Group (SPG), is one of the Mid-Atlantic region's leading economic consultants. Prior to founding SPG he was Chairman and CEO of Optimal Solutions Group, a company he co-founded and which continues to operate. Anirban has also served as Director of Applied Economics and Senior Economist for RESI, where he used his extensive knowledge of the Mid-Atlantic region to support numerous clients in their strategic decision-making processes. Clients have included the Maryland Department of Transportation, St. Paul Companies, Baltimore Symphony Orchestra Players Committee and the Martin O'Malley mayoral campaign.