> were not profitable under $50/barrel. It's important to distinguish marginal cost vs profitability. A company can be operating at a loss for years (if not de

> were not profitable under $50/barrel. It's important to distinguish marginal cost vs profitability. A company can be operating at a loss for years (if not decades) as long as marginal cost of the product doesn't exceed their marginal revenue. To bring this in the context of oil prices: cost of extraction of conventional oil is around $3-5 dollars. This is how much it costs to operate a well with some minimum maintenance. However, this dismisses the cost of development of the well, i.e. of R&D. If you count that in you get closer to $15-$30 depending on the oil field. Higher for offshore, and higher for shale still. Cost of extraction for fracking is around $15 a barrel, but the R&D costs are much higher, to the tune of $40-60 total. Companies can sustain sunk R&D costs for a long time as long as they are maintaining healthy marginal profit. They will naturally not invest into new fields but that cushion can take years to have effect on the prices.