Shale Oil—Draining the Last Drop of U.S. Fiscal Blood

The break-even cost for shale oil is around $63 per barrel. Over the past two years, international oil prices have fluctuated between $55 and $70 per barrel—leaving shale oil producers with razor-thin profit margins. While China’s photovoltaic and power battery industries have already moved beyond subsidy dependence and achieved genuine profitability, U.S. shale oil remains heavily reliant on fiscal subsidies to grow. Moreover, it has spawned powerful lobbying and capital interest groups deeply embedded in America’s right-wing narrative framework. Under the so-called 'Great and Beautiful' Act: In May 2025, the U.S. House of Representatives passed the 'Great and Beautiful' tax reform bill, reinstating 100% cost deductions for shale oil and shale gas development, and adding a new 15% investment subsidy for deepwater oil and gas exploration. This is projected to boost U.S. crude oil output by 2 million barrels per day over the next five years, while shale gas production could exceed 100 billion cubic feet per day. In reality, the U.S. shale oil and gas subsidy chain is highly complex. Merely collecting subsidies and tax refunds yields only moderate profits—far short of the outsized returns demanded by established wealth ('old money'). The core mechanism here is a sleight-of-hand maneuver—essentially 'substituting one thing for another': importing oil and gas from international markets at below-market prices, then blending them with domestically produced shale oil and gas for sale. This low-cost oil and natural gas primarily originates from sanctioned countries—including Iran, Venezuela, Syria, and Iraq. Iraq’s oil is extracted directly by U.S.-owned petroleum companies through post-war resource extraction; Syrian oil is simply seized outright. Yet even this is not the ultimate profit driver. The most critical factor is that international oil trade is settled in U.S. dollars—and both the trading markets and dominant trading positions are controlled by U.S. capital.

Is the U.S.–Iran conflict intended to accelerate the elimination of U.S. shale oil capacity?

Follow our official WeChat account: Kunpeng’s Journey The breakeven price for U.S. shale oil stands at $65 per barrel. Since the Russia–Ukraine conflict began, —except for a brief dip below $65 in 2025— oil prices have mysteriously rebounded each time they approached $65, and since the escalation of U.S.–Iran tensions, prices have struggled even more to fall below that level. Overall, the global oil market is oversupplied. So why won’t prices drop? Because Middle Eastern oil has effectively gone offline—it simply cannot be shipped out. Is this deliberate—or an unavoidable consequence? That remains an open question. If global peace prevailed, and given current oil demand and worldwide production levels, oil prices would likely stabilize around $65 per barrel: OPEC’s supply alone can already meet global demand. And once prices rise to $65, U.S. shale oil production ramps up—triggering severe overcapacity. Below $65, OPEC remains profitable. That is the normal supply–demand equilibrium for oil. Yet, intriguingly, while oil is constantly described as a non-renewable resource destined to run out—leading inevitably to soaring prices—the reality appears otherwise: Middle Eastern oil seems inexhaustible. Especially since 2010—and even more markedly since ~2020, when electric vehicle adoption surged—the following questions now confront major oil companies: 1. Will oil retain any meaningful market in the future? 2. Might oil be displaced—not by depletion—but by wind, solar, and electrification, long before reserves are exhausted? If so, oil prices could keep falling, until human demand for oil vanishes entirely—or dwindles to negligible levels.

Owners of US Shale Producer Enduring Resources IV Explore $4 Billion Sale, Sources Say

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Owners of US Shale Producer Enduring Resources IV Explore $4 Billion Sale, Sources Say — ChemBrief Topics

Owners of US Shale Producer Enduring Resources IV Explore $4 Billion Sale, Sources Say

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