You may have heard that the Saudi stock market has fallen 7%. This is due to falling oil prices.

Which brings up the shale revolution. I have written about it recently. And I have been reading something that has opened my eyes even wider.

Read that last paragraph again. Some shale operators can make good money at $55 a barrel. At $65, they can make higher returns than they did three years ago with oil at $95. I have friends here in Dallas who are raising money for wells that can do better than break even at $40 per barrel, although they think $60 is where the new normal will settle out. Texans are nothing if not optimistic.

How are these new economies possible? Answer: they bent the cost curve downward. It has fallen fast and – more importantly – it will keep falling.

The same process that doubles the power of your smartphone every couple of years without raising its price, is also unfolding in the energy business. That’s why you see per-well production rising so fast in the Eagle Ford, Bakken, and Permian Basin fields. It’s not a result of more wells; rig counts have been falling this year. Rather, the producers are pulling more oil and gas out of the existing wells.

You might want to read the whole thing. And then look at this chart from the article.
 
Oil Economies

WTI oil (Oklahoma) at the time of this writing (24 Aug 2015 0611z) is $39.16 a bbl. Brent (Europe) is $44.27. The Saudis are in trouble. As is the whole Middle East. The fall in the Saudi stock market and the current wars are just the beginning.