A few months ago someone on TOD did a superficial analysis of Saudi Arabia's budget and concluded that, given the size of their social welfare program, they would need about $90/bbl to balance their budget. Yes, the KSA could run a deficit (I think it is less likely they would scale back their welfare program because of concerns about social unrest), but I think it is more likely that they would try to defend $100/bbl.

The problem with easy money is that you get used to spending it, and sometimes it's hard to cut back to previous levels.

Come on londanium, we have decided today would be one of national morning in the oil patch. How are we to survive on this mere pittance? I’m sure some of the traders are panicked but at the well head you couldn’t knock the smiles of our faces with a baseball bat. I doubt $100 oil will take much shine off either the unconventional or conventional oils. Even when oil hit $147 most companies were still using $60 - $80 oil in their economics along with some other fudge factors. Based upon the 12 month running average I would expect oil to be bouncing around $110/bbl. As WT pointed out, Aug was the first drop in monthly avg in 7 or 8 months. And it’s easily to write that off to the high July avg. I can’t see any factors down the road that will permanently shift the trend downward but who knows: demand destruction may be sneaking up some out there along with a little bump on the production capacity side. On the other hand, if OPEC is finally on the verge of becoming a functional cartel, even DD might not bring a long term downward price trend with it.