Despite Saudi Arabia’s considerable pricing power, U.S. oil and gas production will
probably slow for a time but eventually bounce back. The effects will vary from
one location to another; only some U.S. shale fields can still make a profit when oil is
in the $50–60 range. U.S. shale oil will still benefit from the advantage of being
“sweet” crude, meaning that it is easier to refine and store than Saudi Arabia’s “sour”
crude. And with the Saudi commitment to balancing prices in question, shale
producers could come to replace the Saudis as the world’s “swing producers,” capable
of redressing mismatches in supply and demand.