For some reason, analysts and traders seemed to think that Saudi Arabia did not mean what it said when it announced in October that the country didn’t care if the price of crude fell to $80 a barrel and stayed there for as long as two years. At its meeting Thursday in Vienna, OPEC is not expected to cut its official production target of 30 million barrels a day, about a third of which comes from Saudi Arabia and that is putting more negative pressure on the price of crude.

Maybe the fact that Brent crude has now fallen below $80 a barrel got analysts and traders jazzed that the Saudis would cut production, leading other OPEC countries to do the same, and thereby boost the price of crude back toward $100. Everyone seems to have forgotten two things.

First, while it is more expensive now than it was to get Saudi oil out of the ground, the Kingdom’s cost per barrel is at least half that of the cheapest U.S. producer. The usual estimate is $25 to $35 a barrel. Prices have to drop a lot lower before pumping Saudi oil becomes uneconomic.

That is not to say that the country would not feel an economic pinch if the price of oil stays at around $80 a barrel for the next two years as many analysts believe it will. Oil provides about 85% of the country’s export earnings and about 50% of the nation’s GDP.

The lower price produces a bigger impact on other OPEC members, particularly Venezuela, Angola, and Algeria, all of which have been vocal about cutting production to raise prices.

The second thing people have forgotten is that Russia does not play nice with OPEC. It never has and it never will. When OPEC mounted its first embargo on oil shipments to the U.S. in the 1970s, Russia (then the Soviet Union) boosted its output. The head of Russia’s state controlled oil giant Rosneft has said recently that the country will not cut production, at least not immediately, because the current oil price is not damaging.

That’s hard to believe, especially given the pressure that economic sanctions have put on the country. According to a report in the Moscow Times, a per barrel price of $80 for Urals crude (which is usually priced at a small discount to Brent) would drive the country’s budget into a 2% to 2.5% deficit in each of the next two years. Because Russia is locked out of the foreign debt market, it has to use its sovereign wealth fund to patch up the hole. The World Bank has cut Russia’s GDP growth estimate for 2014 to 0.5%, less than half the 1.1% GDP growth the country saw in 2013.

The Saudis won’t cut production, at least not yet, and the other members of OPEC will have to tag along. Russia won’t cut production yet either. In the U.S., producers in the Bakken and the other shale plays won’t cut production but are likely to scale back capital spending which will have the effect of cutting production in the future. Almost nothing except an accident happens quickly in the oil business, and that means we are like to see low crude prices — and gasoline prices — for the next year or more.

ALSO READ: Are Oil Analysts Getting Too Pessimistic With Lower Oil Prices?

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