Why the Saudis want $100-a-barrel oil - Brad Plumer

http://www.washingtonpost.com/blogs/ezra-klein/post/why-the-saudis-want-oil-to-be-100-a-barrel/2012/01/17/gIQAXvuo5P_blog.html

It’s not just the Saudis, either. A 2011 report from the International Monetary Fund found that the “break-even” point for the world’s major oil producers has been rising at a shocking rate. Russia now needs crude prices at roughly $110 per barrel to shore up its finances. Iraq, Bahrain, Algeria, Iran and the United Arab Emirates all need prices between $80 and $100 per barrel. The lone exceptions, Qatar and Kuwait, can skate by with moderately lower prices, but even those countries have seen their break-even points creep upward in recent years.

In other words, even if China were getting enough oil and Nigerian unrest did not disrupt supply and fears about a war with Iran did not inflate prices, there is no way for oil to go below $100 a barrel. Remember that many of the gulf states staved off the Arab Spring by increasing subsidies and handouts. Those are not going away if the regimes in place have any interest in staying in power. Instead they will ask the oil consumer to purchase the cost of keeping them in power. Whether this is a fair trade-off is up for debate but the simple fact is that gas prices literally cannot fall much from where they are right now.