As of July 3rd, US crude oil production was 9.6 million barrels per day. The highest in at least 32 years. This is one year after the price of oil began to plunge. Since December / January, when oil particularly got cheaper, US crude production has expanded another 5%.
In fact, the Saudis have accomplished the effect of forcing US companies to innovate and make fracking even cheaper. What people seem to fail to understand about fracking, is that it's a shift in technology, not a temporary blip. It will continue to get cheaper and more efficient, and it will spread globally, leading to a wave of oil for decades. Just wait until you see what US frackers can do in Mexico with a liberalized oil market there.
As an example of technology making fracking cheaper, meet re-fracking:
http://www.bloomberg.com/news/articles/2015-07-06/refracking...
Most fracking companies are pretty bloated right now and they have plenty of things they can do to improve returns w/o new tech. But lower gas prices means higher risk - thus less investment.
The Saudis weren't the primary cause of the price drop anyway. The US dollar going on its greatest run in decades is what broke the price of oil. The strong dollar also caused the low price of oil in the late 1990s. The US dollar is the only thing that coincides with the drop in the price of oil. Global oil production had been in significant over-production for years prior to the price falling.
Most of the increased capacity is due to wells that were started before the prices dropped. You'll see the output dropping once those wells start tapering off, and no new ones are coming online to keep up the supply.
Pioneer, Apache, EOG, Continental, Concho, etc - along with a few majors that are involved - will withstand the oil decline. More specifically, they'll gobble up the smaller debt-ridden players as they collapse, accumulating vast resources for pennies on the dollar.
If someone like EOG tips over, a major like Exxon will scoop them up in the same way. Exxon would love to continue boosting its domestic holdings (after making a few big bakken acquisitions previously). Exxon for example has managed to drop its bakken production costs by 25% in less than five years.
Indeed, this process will lower the cost level US oil can be produced at even further. When the debt heavy players collapse, their existing property and assets will be liquidated for cheap, bringing down the cost for the acquirer - they won't have to pay a premium for the assets. Debt makes the net operational costs higher; if you wipe it out in bankruptcies, the total industry production costs will fall proportionally.
Simultaneously, the producers are getting a lot more production per rig. In the bakken, the average new well production has increased from 200 barrels per day to 600, in five years.
What is the rate of exploration and drilling? Surely that has slowed. Also, what about natural gas?
Natural gas has a massive, perpetual domestic demand basis. That isn't going to change unless the price of natural gas goes up three or four fold from here. Coal plants are being shuttered, coal has gone from ~45% to ~30% of US energy production in a decade, while natural gas has become the #1 energy supplier in the US.
The US has essentially infinite natural gas, as far as consumption in the next hundred years is concerned. It's a non-issue in any direction.
It also had the effect of making fracking too expensive, but I bet they didn't care much about it.
Only for vehicles; oil is not fungible between utility and transportation energy needs. Solar and wind compete against coal and natural gas (I concede natural gas prices are a function of US fracking, but natgas pricing has always been highly variable in the US).