When I was at the Bank Credit Analyst annual conference last month, they had a speaker on oil prices. I don’t recall the women’s name, who spoke, but she had calculated Venezuela’s, Iran’s and Russia’s breakeven prices on oil and she had them both around $90. Her explanation for why Venezuela’s was so high was because of all their social programs and Russia’s was a result of their recent increase in military spending and Georgian war. Iran’s difficulties had more to do with their low quality oil, domestic subsidies and government spending. I don’t know how she calculated this though. I will try and find her presentation and post that section later today.

Additionally, OPEC countries are canceling projects left and right, including Saudi Arabia. It seemed like every other page of this week’s UpStream had something about a project delay or cancelation. While I think it is a stretch to think that OPEC can’t balance their budgets without higher oil, it should be said that it is a controlled market, and OPEC certainly did like higher prices. Furthermore, it looks like we will not meet the EIA spending target because of all the cancelations. So while the OPEC governments are likely able to run at these levels, investment in infrastructure is going to be greatly reduced, particularly in the oil and gas sectors.

Jurek, Where can I get a copy of that RBC sensitivity study for Canadian Royalties Trusts