How many “could be used” oil wells are drilled and then shut down and not producing because of allotments?..



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    Producing or producible oil wells in general are shut-in for short-term weather reasons (like hurricanes) or mechanical problems; longer term shut-ins are usually for economic reasons – the production may be too low to be economic, or, conceivably, there could be a shut-in with the plan to wait until prices were higher. That would be pretty unusual and not at all common. A new-field discovery might be shut in until additional drilling would prove (or disprove) the economic viability of a field.

    Within OPEC, producing wells may be shut in so as to adhere to quotas. Saudi Arabia, the only producer with any significant spare capacity (producible wells that are shut in), might shut or open wells in an attempt to affect the overally supply (and therefore the price). It is pretty unlikely that they can do that in a significant way, or for very long – it all depends on how much spare capacity they actually have, and no one knows that.

    OPEC certainly did manipulate the price in the 60s and 70s, before non-OPEC producers like Mexico, Canada, Norway, and Russia were very important, and when the only really big market was the US. The US is still by far the largest consumer, but others are impacting production and marketing plans and decisions.

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