My understanding with respect to the oil industry is that they have relatively high capital costs, and lower marginal costs. If prices drop so that they become

My understanding with respect to the oil industry is that they have relatively high capital costs, and lower marginal costs. If prices drop so that they become unprofitable, it still makes sense to drill because the fixed costs are already sunk. It could also make sense if you expect the low prices to be a temporary situation, and shutting down and restarting would be expensive. Either way, producing at a loss is not sustainable in the long run, so without costs falling or prices increasing, they would eventually go out of business. This isn't really a factor for Arizona, since as a brand, not a commodity, they can set their price, and since they're cheaper than many of their competitors, they have room to work with here, too. If their unit cost is higher than their unit price, they don't expect costs to decrease, and they don't intend to raise their price, they would simply make more money by not making the product.