Although I would be surprised if US foreign policy didn't play into it, I don't think the argument that Saudi Arabia is soaking their competition is a farce. If prices rise, newer extraction methods in the US and Canada are viable, and given a foothold, there may be economies of scale and infrastructure that will bring them down over time. It's quite possible that the Saudis have more than one reason to keep production high, and that synergy might be why prices have fallen so very low.
The United States has largely invested in infrastructure rather than fields. Thus Keystone XL, thus the massive refinery retrenching around Houston. We now process something absurd like 20% of the world's oil. This takes time, energy and planning... while the drop in gas prices has taken place over a few months. Getting the US into a position where an oil squeeze benefits us and hurts others has taken some orchestration but here we are. As pointed out in flagamuffin's excellent article last night, the majority of the world's oil producers are now state-owned... and nobody is selling Iran refining equipment. When you're dealing with an organization that everyone calls a "cartel" with a straight face, it's purest folly to expect Adam Smith's Invisible Hands to be the cause of major geopolitical destabilization.If prices rise, newer extraction methods in the US and Canada are viable, and given a foothold, there may be economies of scale and infrastructure that will bring them down over time.
It's quite possible that the Saudis have more than one reason to keep production high, and that synergy might be why prices have fallen so very low.