Free market economics would have the lowest cost of production selling the most. The EIA has published the cost of production worldwide and no surprise the Saudi's are the lowest cost. The Keystoner's Athabasca Bitumen upgrader version is the most expensive to produce at near $100 per barrel. The bitumen is the worst quality in the world, and the Canadians will only be able to sell their garbage at the lowest price in the world, at least $20 below WTI. That's OK, they said they will sell at any price, despite the loss. Losing $60-$80 per barrel, they will run out of cash, self-financing money soon enough, that will only go on as long as their are banks or provinces are stupid enough to pile more money into destroying the planet and killing those downwind. Frac oil isn't cheap either, but Americans cut back the drilling rather than sell oil at a loss.
This isn't market manipulation, it's free market seeking the lowest production cost. Higher cost of production will just lose money, but that would require companies to be honest about their future rather than lie.
Ultimately if the planet has any chance at all, there is more coal, gas, and oil in the ground on asset books that will never be produced. Something like 80% of the coal, 54% of the oil, and 38% of the gas will have to stay in the ground to keep the global temperature rise below 2 degC. Drilling in expensive locations is a waste of shareholder money, the Board of Directors and C-officers should be removed.
This isn't market manipulation, it's free market seeking the lowest production cost. Higher cost of production will just lose money, but that would require companies to be honest about their future rather than lie.
Ultimately if the planet has any chance at all, there is more coal, gas, and oil in the ground on asset books that will never be produced. Something like 80% of the coal, 54% of the oil, and 38% of the gas will have to stay in the ground to keep the global temperature rise below 2 degC. Drilling in expensive locations is a waste of shareholder money, the Board of Directors and C-officers should be removed.
The bell is tolling for big oil. It is now cheaper to produce electricity from renewables than from fossil fuels. Fuel can be synthesized from these renewable energy resources and the technologies are here.
The Audi subsidiary of Volkswagen has a plant producing liquid fuel that burns in their TDI Diesel Engines from water, CO2 and electricity produced by renewables. You read that correctly- a fuel that can be used in card on the road made from water, CO2 and electricity. They also have a plant that produces ethanol from renewables for their gas type TSI engines.
The pilot plant has been running for years now.
Here is a link to the German Audi Technology Site - in English- with details on both renewable technologies.
http://www.audi-technology-portal.de/en/mobility-for-the-future/audi-fut...
http://www.audi-technology-portal.de/en/mobility-for-the-future/audi-fut...
We need to end all subsidies to dirty fossil fuels & allow the market to transition to renewables. America has more than enough Solar & Wind power to fuel our transportation, heat & cool our homes, power our heavy industry and help clean our air while lowering our carbon footprint.
All we need is political leadership.
The Audi subsidiary of Volkswagen has a plant producing liquid fuel that burns in their TDI Diesel Engines from water, CO2 and electricity produced by renewables. You read that correctly- a fuel that can be used in card on the road made from water, CO2 and electricity. They also have a plant that produces ethanol from renewables for their gas type TSI engines.
The pilot plant has been running for years now.
Here is a link to the German Audi Technology Site - in English- with details on both renewable technologies.
http://www.audi-technology-portal.de/en/mobility-for-the-future/audi-fut...
http://www.audi-technology-portal.de/en/mobility-for-the-future/audi-fut...
We need to end all subsidies to dirty fossil fuels & allow the market to transition to renewables. America has more than enough Solar & Wind power to fuel our transportation, heat & cool our homes, power our heavy industry and help clean our air while lowering our carbon footprint.
All we need is political leadership.
3
When crude oil prices trend down, as now, and will clearly be the case into the near future; and as long as global corporate oil producers are helpless to stem and/or tilt these supply/demand curves - the U.S. Energy Dept should fill all our salt dome reserves to capacity - and ponder building newer and more environmentally safe long-term crude oil underground storage facilities.
Good. I'd like to see more Oil Companies go into the red, and out of business.
Now, if "the market remains challenging, and we are in the midst of a significant downturn if offshore drilling" - why, oh WHY did the Obama Administration grant Shell Oil the permit to drill offshore in the Arctic this week ??? The uncontrolable Environmental devestation from a spill in the Arctic could never be cleaned up. Arctic Winters are tougher than any oil rig. The complete destruction of ecosystems will be the outcome of this gross and greedy legislation.
Years ago, the Diesel Engine was designed to run on vegetable oil from whatever crop you were growing. We have the capacity to "grow our own gasoline" in this Country, a fuel which is non-polluting, renewable, and made in America.
As an American, I am sick of my tax dollars going to support illegal Wars that are fought - not for Democracy, not for equal rights for Women - but to make the World safe for Big Oil and Defense Contractors. We know that burning fossil fuels is killing the Planet, and thus ourselves, and yet our leaders take us down the same poisonous road, and act like lap dogs to the Oil Industry.
We have the complete ability to provide all of our electric needs through Solar and Wind Power. We can literally grow our own "gasoline". If we do that, we can tell OPEC to take a hike. We would be stronger and healthier for it. And, we could do it now.
What stopping this from happening? Greed.
Now, if "the market remains challenging, and we are in the midst of a significant downturn if offshore drilling" - why, oh WHY did the Obama Administration grant Shell Oil the permit to drill offshore in the Arctic this week ??? The uncontrolable Environmental devestation from a spill in the Arctic could never be cleaned up. Arctic Winters are tougher than any oil rig. The complete destruction of ecosystems will be the outcome of this gross and greedy legislation.
Years ago, the Diesel Engine was designed to run on vegetable oil from whatever crop you were growing. We have the capacity to "grow our own gasoline" in this Country, a fuel which is non-polluting, renewable, and made in America.
As an American, I am sick of my tax dollars going to support illegal Wars that are fought - not for Democracy, not for equal rights for Women - but to make the World safe for Big Oil and Defense Contractors. We know that burning fossil fuels is killing the Planet, and thus ourselves, and yet our leaders take us down the same poisonous road, and act like lap dogs to the Oil Industry.
We have the complete ability to provide all of our electric needs through Solar and Wind Power. We can literally grow our own "gasoline". If we do that, we can tell OPEC to take a hike. We would be stronger and healthier for it. And, we could do it now.
What stopping this from happening? Greed.
4
So why is the price of gasoline so very much like the price I paid when oil was $100 a barrel? Surely in other industries, when the pride of the raw material drops dramatically, the price of the end product goes down, too.
2
The drop in oil prices is a very good thing. Maybe not for Texas and Alaska, but less money flowing to oil exporters like Russia, Iraq, Iran means less money to fund Islamist governments, ISIS, and Russia's attempt to dominate Ukraine and the baltic nations. It should also mean that the US can take a more realistic view of the necessity for our involvement in Mideast civil and tribal wars. And just maybe Senators Graham, McCain and other Republican hard liners can modify their positions on the need for inserting American military resources into the mideast and focus on a "tough love" policy for Israel that will bring them to the realization they need to negotiate a Palestinian state solution for their survival.
5
The Saudis are set on driving the American fracking companies out of business, that's why they keep the prices low.
Of course that's bad for renewable energy business, electric cars and other more future-oriented energy related businesses.
Of course that's bad for renewable energy business, electric cars and other more future-oriented energy related businesses.
But oil company lobbyists continue to drill into our government to make sure the corporations get more and more of our tax dollars and more an more opportunity to degrade the environment. Obama's approval of the Shell Oil drilling in the Arctic is a perfect example of the strangle hold oil companies have on our government.
2
We have to explore and drill in the Arctic because the Russians (and Canadians, Norwegians) are all moving to place their stakes as polar ice melts.
It's a national security issue that cannot be ceded to short term market conditions.
It's a national security issue that cannot be ceded to short term market conditions.
1
Hooray!
I love low gas prices, but oil is a finite resource. Prices will go up again, sooner rather than later.
3
Looks like we don't really need Keystone!
6
Keystone has been an effective rallying point for environmentalists but it merely symbolic and has little practical impact on GHG issues. Oil companies will continue to develop the oil sands with or without Keystone, provided they get a decent return on the investment. There are other pipelines and more and more oil is being moved (unsafely) by rail. Stopping Keystone is irrelevant.
We should all be concerned about the oil glut because in incentivizes more consumption. More people buy inefficient SUVs and trucks in a low gasoline price environment. They stop insulating houses and waste electricity; low energy prices equal increased consumption. Environmentalists should be arguing against the potentially devastating Arctic drilling greenlighted by Obama this week. In the fight against climate change Keystone is less than a grain of sand on the beach.
We should all be concerned about the oil glut because in incentivizes more consumption. More people buy inefficient SUVs and trucks in a low gasoline price environment. They stop insulating houses and waste electricity; low energy prices equal increased consumption. Environmentalists should be arguing against the potentially devastating Arctic drilling greenlighted by Obama this week. In the fight against climate change Keystone is less than a grain of sand on the beach.
Why such a negative sounding tone throughout this article about that fact that energy giants are not reaping huge windfalls like always and actually feeling the little pain of lower rapacious growth and gluttony?
I always heard that energy independence was a laudable and desirable goal to be sought after. The dire nature of this report seems contrary to what should otherwise be adulation and celebration. What gives? Was that goal just a crock of bull where the real purpose of the prevarication was to get people to quietly sit by while the energy giants gain rough-shod over us and rapped the environment for all that they could at our expense?
Well they sure did that and now you want us to shed a tear for them now that their rampage is fizzling out? There's no tears coming from this writer's eyes, that's for sure.
I always heard that energy independence was a laudable and desirable goal to be sought after. The dire nature of this report seems contrary to what should otherwise be adulation and celebration. What gives? Was that goal just a crock of bull where the real purpose of the prevarication was to get people to quietly sit by while the energy giants gain rough-shod over us and rapped the environment for all that they could at our expense?
Well they sure did that and now you want us to shed a tear for them now that their rampage is fizzling out? There's no tears coming from this writer's eyes, that's for sure.
This is just further proof that the oil industry remains disorganized, mismanaged and chaotically rapacious. While Gulf lease bids decline (and economic bust cycle looms), housing development associations in northern Colorado fight new plans for drilling in their backyards. Weld County in the region experiences earthquakes from fracking and air pollution threatens the health of the area's children. Toxic shale oil is being disgorged from failing pipelines throughout the country and pressure is being put on politicians to allow more pipelines to be built. The Obama Administration has opened the Arctic for Shell to drill and invited more environmentally destructive spills on ecologically sensitive shores. This industry, crucial (for now) to the country's well being, should have been nationalized during WWII and managed properly.
2
Cue the political and business elite earnestly trying to convince us that low oil prices are bad for the economy. Sure, they're bad for oil company executives with 4 mortgages and a jet to pay for (and thereby for politicians seeking "support" as they run for office), but for the rest of us - the other 99.999999999% of American society - this is a welcome relief. We've been getting ripped off by artificially-inflated oil prices for years. It's about time.
By all means, the world must find more alternative source of energy other than oil. It's time for the world to stop purchasing oil from middle east so that it'll use as a source of fund diverted to nuture terrorists.
Two days ago President Obama approved the final permit for Shell to commence exploratory drilling in the Arctic Ocean. Shell is now free to drill into oil-bearing rock, estimated at 8,000 feet below the ocean floor, tempting harsh environmental conditions that exist in an area so remote that response to any potential spill could be hindered for months. This could end in an environmental catastrophe that makes the disastrous 2010 Deepwater Horizon oil spill look trivial.
Given the fact that oil supply is no longer a factor, and won't be a factor anytime in the foreseeable future, I have to ask one simple question:
Why?
Given the fact that oil supply is no longer a factor, and won't be a factor anytime in the foreseeable future, I have to ask one simple question:
Why?
3
"One outgrowth of that surplus is the challenge of where to put all the oil." How about lowering the retail prices for gasoline and putting that surplus in the gas tanks of American cars??? The entire oil company supply chain will benefit from increased sales and the US consumer will have additional discretionary funds to put into the economy's 70% that are consumer purchases!
1
This whole oil price thing seems like a giant shell game to me. High prices are bad, some say. Drive up the price of everything, food, gas, all things that must be trucked, air tickets, cruise tickets, power etc. Low prices are bad as big oil cannot make money, very sad!! Do the prices of all the above come down, NO. Regular gas is still around 3$ gallon in NYC.
The New York Times follows other media outlets in proclaiming a glut but this is incorrect. There is really a shortage.
Right now the industry extracts 90+ million barrels per day. However, only 88 million barrels per day are consumed, the rest goes into shortage.
With a fully functioning waste-based economy the industry would need to extract 100 mbpd. It is the absence of the extra 10 mbpd that is giving our extraction-to-waste enterprise the bends. The 10 million barrels aren't in the market because they aren't available to extract. This is due to geology.
If the industry were to extract 10 million barrels per day instead of 90 million it would look like a 'glut' if only 7 million of those barrels are consumed. In actuality there would be a massive shortfall as the demand would still be over 100 million barrels.
The glut story is a self-satisfying fairy tale told by an industry in denial. We are all camped out at the edge of energy deflation:
http://www.economic-undertow.com/2013/01/23/net-energy-end-game-theory/
Once in its grip there is no escape, fuel prices will fall to reflect actual returns on fuel use rather than ability to access credit ... actual returns is likely a negative number. At $0 there is no fuel use, no economy either. We are a lot closer to zero than $100.
Right now the industry extracts 90+ million barrels per day. However, only 88 million barrels per day are consumed, the rest goes into shortage.
With a fully functioning waste-based economy the industry would need to extract 100 mbpd. It is the absence of the extra 10 mbpd that is giving our extraction-to-waste enterprise the bends. The 10 million barrels aren't in the market because they aren't available to extract. This is due to geology.
If the industry were to extract 10 million barrels per day instead of 90 million it would look like a 'glut' if only 7 million of those barrels are consumed. In actuality there would be a massive shortfall as the demand would still be over 100 million barrels.
The glut story is a self-satisfying fairy tale told by an industry in denial. We are all camped out at the edge of energy deflation:
http://www.economic-undertow.com/2013/01/23/net-energy-end-game-theory/
Once in its grip there is no escape, fuel prices will fall to reflect actual returns on fuel use rather than ability to access credit ... actual returns is likely a negative number. At $0 there is no fuel use, no economy either. We are a lot closer to zero than $100.
1
An oil glut you say? Barrel prices dropping to $40? What are well-heeled oil producers to do?
I hadn't seen the "Kenny Boy" Lay Enron shuffle since they hoodwinked California with energy blackouts, and then we hear that refineries are being closed for the same kind of "maintenance". Lo, suddenly the price of oil diverges from the pump price and the Koch brothers are in the money once again.
In a true free market, they'd all be in jail for fraud.
I hadn't seen the "Kenny Boy" Lay Enron shuffle since they hoodwinked California with energy blackouts, and then we hear that refineries are being closed for the same kind of "maintenance". Lo, suddenly the price of oil diverges from the pump price and the Koch brothers are in the money once again.
In a true free market, they'd all be in jail for fraud.
Why won;t gas prices drop lower than $2.85/gallon here in the metropolitan area? Oil is down to near $40 a barrel from $60 barrel only 6 months ago. Yet gas prices have remained steady. Give us an explanation, please.
1
It has always seemed to me that if oil is the strategic and finite necessity the gov't says it is, then we should do all in our power to keep ours in the ground. If we are going to run out someday, then lets buy all that the Saudis et al will sell us. I sure hope the gov't is refilling the "strategic reserve" that I used to hear so much about while oil is cheap.
2
Oil prices in the country have been manipulated by the oil industry for years. The lobbied against mass transit. They encouraged no changes in the internal combustion engine. Now, according to the oil companies the economy faces a cheap energy apocalypse by low oil prices, They owned the recent Bush Administration and intimidated the Obama Administration to give BP a waiver against meeting regulatory standards that lead to the Gulf oil spill at the beginning of Obama's term in 2009. Iran and Russia have been severely impacted by the oil glut. But the present economy has been built on expensive oil and has vast interconnectedness. Recent bonanzas are sure to crumble and banks are going to lose lots of money.
1
Poor little Exxon - just can't afford any more drilling. Take a look at how "poor" they are. It's about holding back SUPPLY so WE have to pay higher prices. Thanks, once again, to the top 1% global financial elite who are strangling the rest of us economically. Time to send their operatives home from every elected office in America, and the world, and stop the destruction of lives and OUR planet.
https://en.wikipedia.org/wiki/ExxonMobil
https://en.wikipedia.org/wiki/ExxonMobil
2
As soon as the Saudis are thru ruining the oil industry in this country (to the glee of liberals) the OPEC spigot will be turned off and we will be back to 4 dollar gas (to the glee of liberals).
2
So, liberals are plotting to impose both cheap oil and expensive oil on the American public. My we are crafty, if confused. What I can tell, from history, low oil prices generally hurt red states and the ability of the GOP to dump huge money into politics.
1
Haven't we realized, yet, that it is, in every sense of the words, strictly, a Shell game! You think Big Tobbaco has quietly gone away, not in my life time and definitely, not in yours. They will come-up with another " nicotine delivery system ". They are making more money now, than they ever have. So much for following the rules, for it is those clowns, who pay for the writing of those rules!
3
Don't look at just oil prices declining. This is part of a huge commodity price drop. Oil, copper, iron, silver are crashing in price. This means the world economy is not growing if we are not using these raw materials. This pure and simply is deflation, which means that all this debt we have created to stimulate growth is not working. These trillions of dollars in debt can only be repaid if the world economy is growing, and it obviously is not. What happens next is anyone's guess.
8
Not so fast. Drop in commodities is linked to pullback in China (other than oil glut, which is tied to higher US production). Chinese have been hoarding raw materials for years and now they're not. This creates a ripple effect through the commodity markets and related industry, but whether it leads to unhealthy overall deflation is another matter.
3
In my mind hoarding by China is a sign of them trying to goose their growth numbers where no growth existed. Regardless, they probably hoarded oil at $60 a barrel that is now worth $40. I still think that when commodity prices drop below their extraction cost, something scary may be on the horizon.
1
Interesting point, John, but gee, I thought the modern economy was above the banal realia of making things. Aren't the genius saviors of the economy the guys who manipulate computer codes and theoretical dollars?
Why not just declare OPEC a monopoly that is fixing production and prices to drive out competitors. Transfer the damages in the form of duties and tariffs to pay for our infrastructure including charging stations for electric cars.
We broke up Standard Oil why can't we break up OPEC who is trying to drive US producers out of the oil business through collusive practices? It's clear prices are being driven down to drive the US and Canada out of the oil business. Prices will rebound sharply at some point as more and more rigs are shut down and economic activity begins to rise.
We broke up Standard Oil why can't we break up OPEC who is trying to drive US producers out of the oil business through collusive practices? It's clear prices are being driven down to drive the US and Canada out of the oil business. Prices will rebound sharply at some point as more and more rigs are shut down and economic activity begins to rise.
Unfortunately, anti-monopoly laws only apply to corporations -- they don't apply to sovereign nations. Although Exxon Mobil cannot conspire with Royal Dutch Shell to fix oil prices, OPEC members are completely sovereign nations that have the right to set domestic policies in any manner they wish. This includes their policy on oil and how much they wish to produce.
1
Will continued low prices hurt US producers? Yes, but not nearly as much as they will hurt countries like Saudi Arabia who are dependent on oil exports for their primary revenue stream. And if Iran also begins supplying oil after sanctions are lifted, things will be even worse for Saudi Arabia and company.
The only answer is to have the cleanest, safest, and most reliable energy source, a modern nuclear power plant.
Think about it, no one lobbies for nuclear. The "energy" companies lobby against it and so do the environmental groups. It's all fear mongering.
Everyone talks about the "waste". All of the "waste" from all of the nuclear power plants in the U.S. would fit into a Costco warehouse. Essentially, there is no waste when you can bury it in a mountain in the middle of no where. Compare that to any filthy oil platform.
As for wind and solar, sure, but what happens on a windless winter night? Technology will save the future, and the safest, most reliable, and least expensive bet is NUCLEAR!
Think about it, no one lobbies for nuclear. The "energy" companies lobby against it and so do the environmental groups. It's all fear mongering.
Everyone talks about the "waste". All of the "waste" from all of the nuclear power plants in the U.S. would fit into a Costco warehouse. Essentially, there is no waste when you can bury it in a mountain in the middle of no where. Compare that to any filthy oil platform.
As for wind and solar, sure, but what happens on a windless winter night? Technology will save the future, and the safest, most reliable, and least expensive bet is NUCLEAR!
1
" expressed concern that the oil price collapse could last through 2016 and even 2017, and it is important that they tighten their belts even more."
"With Only $93 Billion in Profits, the Big Five Oil Companies Demand to Keep Tax Breaks"
https://www.americanprogress.org/issues/green/news/2014/02/10/83879/with...
belt tightening? whose belt? the driving public is my guess.
"With Only $93 Billion in Profits, the Big Five Oil Companies Demand to Keep Tax Breaks"
https://www.americanprogress.org/issues/green/news/2014/02/10/83879/with...
belt tightening? whose belt? the driving public is my guess.
1
So the republicans proposed to sell off oil from the Strategic Reserves to fund the Highway Bill. As this article shows, it would be sold at a low price. So the new "owners" let it sit in the salt domes and then the republicans and Bibi bomb Iran. The people who "bought low" just made a ton of money.
You see how that works?
You see how that works?
3
The question becomes en why are we going to drill in the Arctic off the cost of Alaska? This addiction to oil is insanity President Obama.
1
What I do not understand is..if oil prices dropped, why hasn't anything else? Food went sky high because they stated that the price of transportation increased, pump prices, sky high, heating oil, sky high, airfare also sky high. I am sorry but I just cannot be sympathetic for these companies, they had a good ride for several years when gas was over $4.00 a gallon. We paid when things were high and now we do not get to share when things are lower. To me, the past few years were prices inflated and in turn, inflated profits, like the housing bubble.
17
Lodging prices are sky high. Cheap fuel prices hasn't kept me home this summer. It was the motel rates that did.
People seem to refuse ti think out of the box. We need to do everything we can to stop using fossil fuels no matter how much it hurts the economy. We need the fools who think they need big suv's and pickup for status to get educated. Oil is to valuable a resource to be burning. It's time for a paradigm change in thinking.
1
All the more reason NOT to transport trainloads of toxic oil over the largest aquifer in the US, and produces most of the country's foodstuffs. Of course, derailment would never happen, would it?
2
Well Gee when you make less money you have to spend less money. When oil prices are down the value of potential resources is lower and of course you bid way less.
I remember when airlines were falling on hard times because of the price of fuel (and the losses from the 9/11 attacks) while we were sending our armies to the middle east to protect oil fields and keep them out of Saddam's hands.
Someone said back then they hoped to see the day when airlines were profitable and oil companies were begging for government handouts.
Maybe. Maybe.
Someone said back then they hoped to see the day when airlines were profitable and oil companies were begging for government handouts.
Maybe. Maybe.
“The financial squeeze is tighter than people thought, ..."
No, really not. The "contrarian" financial pundits - you know, those voices in the wilderness that completely predicted the Great Recession? - were predicting this financial bottleneck well in advance, and very clearly.
The financial squeeze is tighter than the fiscal pimp industry was predicting, yes. No one ever went broke underestimating the intelligence of the American financial advice industry.
No, really not. The "contrarian" financial pundits - you know, those voices in the wilderness that completely predicted the Great Recession? - were predicting this financial bottleneck well in advance, and very clearly.
The financial squeeze is tighter than the fiscal pimp industry was predicting, yes. No one ever went broke underestimating the intelligence of the American financial advice industry.
The republican's attack on Iran will send the prices through the ceiling. I think that's part of the strategy. A big part of the strategy.
12
The stone age did not end for lack of stone. Let's stop borrowing money so they are can buy oil in order to burn up our future.
2
Despite the fall in oil prices the price at the pump continues to remain in the stratosphere. Why? I don't feel one ounce of sympathy for the oil companies. They've gouged consumers for years. They even managed to hurt people who signed leases for fracking and they ran over them pretty good too.
As for the other oil producing nations like the Saudis and the Gulf States, well, too bad. Hope they enjoy eating the oil they can't sell. Other producers also deserve the pain. Since the 1970s the American consumers have borne the brunt of high oil prices. Heating oil, diesel, and every other use for oil was hard hit. The wheel of justice and of economics turns everyday. Now it's our turn. Prices are low...Too bad. But not for us.
As for the other oil producing nations like the Saudis and the Gulf States, well, too bad. Hope they enjoy eating the oil they can't sell. Other producers also deserve the pain. Since the 1970s the American consumers have borne the brunt of high oil prices. Heating oil, diesel, and every other use for oil was hard hit. The wheel of justice and of economics turns everyday. Now it's our turn. Prices are low...Too bad. But not for us.
1
It looks like the prices of kayaks will be coming down soon, since they're made from oil.
1
There's no oil in plastic; there are HGLs, byproducts of the oil refining process. The price of plastics is linked to the rate at which needed byproducts are produced in refineries, not to the price per barrel of the oil going into said refineries. In short, no, there is no reason to expect a fall in plastic prices because of oil glut.
Let's all remember that the "experts" have been proving WRONG before.
Last year oil was over $100 a barrel. Now it is barely above $40.
If you were as smart as these people claim to be then you would have been rich selling futures for around $100 and buying the actual oil for delivery at $40.
Basically NOBODY did this. Why? Because we aren't that smart.
People are now predicting little change in the future. Go back a year, just before the plunge, and you will see that they were also predicting little change in the future.
I'm not smart enough to know where oil will be next year. But I AM smart enough to KNOW that I don't know.
Last year oil was over $100 a barrel. Now it is barely above $40.
If you were as smart as these people claim to be then you would have been rich selling futures for around $100 and buying the actual oil for delivery at $40.
Basically NOBODY did this. Why? Because we aren't that smart.
People are now predicting little change in the future. Go back a year, just before the plunge, and you will see that they were also predicting little change in the future.
I'm not smart enough to know where oil will be next year. But I AM smart enough to KNOW that I don't know.
Dropping oil prices add a surprising new dimension to the world financial system by directly injecting massive instability. While often heralded as a godsend to the economy and the end consumer we must remember lower prices hurt both producers and those in the business of oil exploration, drilling, and sales.
When financial problems occur in the energy sector it is often accompanied by political instability and sometimes her ugly sister war. As a rule the economy loves stability, bottom-line dropping oil prices means more risk for an already shaky world economy. All this is being complicated by the recently strong dollar.
The dollars strength and the rising American stock market could also be taken as a sign of an unstable global economy. The money flowing in from other countries in search of a safe home screams of a bigger problem! When a strong shift in currencies occurs someone usually gets hurt and this can lead to bankruptcy, default, or contagion.
http://brucewilds.blogspot.com/2014/11/dropping-oil-prices-increase-risk...
When financial problems occur in the energy sector it is often accompanied by political instability and sometimes her ugly sister war. As a rule the economy loves stability, bottom-line dropping oil prices means more risk for an already shaky world economy. All this is being complicated by the recently strong dollar.
The dollars strength and the rising American stock market could also be taken as a sign of an unstable global economy. The money flowing in from other countries in search of a safe home screams of a bigger problem! When a strong shift in currencies occurs someone usually gets hurt and this can lead to bankruptcy, default, or contagion.
http://brucewilds.blogspot.com/2014/11/dropping-oil-prices-increase-risk...
What is amazing about this news is the continued high prices of gasoline at the pumps. Oil has dropped 50% per barrel since last year at this time, but the gas companies are continuing to gouge the consumer. When will our political leaders who are supposed to be looking after our interests investigate and slap meaningful fines against these usurious practices?
26
Political leaders have been raising taxes on gasoline purchases, so even though oil prices are declining, the price at the pump hasn't gone down very much.
1
Price of gasoline is most influenced by refinery capacity. Environmental laws effectively make the construction of new US refineries impossible.
I got news for you from someone who has worked in the Oil & Gas business. Whatever the price is at the pump, on average only 8-10 cents/gallon is going to the oil company. Most of it is either direct market cost or taxes. The profit per gallon is roughly 3% on average.
2
Good, my SUV will be cheaper to run.
3
actually no; since pump prices arent moving
3
No it won't
Last summer gas was $4/gal. This summer it's been just over $3/gal, it's been as low as $2.80/gal. That's a pretty substantial drop in my book...
OPEC, which has been robbing us, not without our own complicity, of our gas money for years, is on the ropes. Time to deliver the knockout punch.
Unless you really need it because you are a contractor or drive on rough terrain, stop driving those needless, look-alike, poor performing, gas-guzzling SUV's.
As much as possible, drive hybrids.
Unless you really need it because you are a contractor or drive on rough terrain, stop driving those needless, look-alike, poor performing, gas-guzzling SUV's.
As much as possible, drive hybrids.
45
OPEC is not on the ropes, and if you say tow a boat no hybrid. It also is not economic to drive a hybrid for many people, after all batteries don't last forever and will need disposal or better yet recycling. How about where you can use mass transit only. Leave the fuel for folks where I live.
We recently bought a 2014 Ford Focus 5-speed manual. It's computer tell us that on a recent trip of 1,200 miles the engine ran 20 hours which is an average speed of 60 mph. The mileage was 43 mpg, with the air on for most of the trip.
Saudia Arabia's oil is produced at a much lower cost than just about anywhere else. So while the Saudi's are hurting, the U.S. producers (and Russians, and just about all other producers) are hurting a lot more! But yes, it is mindless to consume gasoline needlessly. Get a Prius.
It surprises me to keep hearing about oil price drops because the price at the pump still seems about the same. Its still $3/gallon.
5
Yes, the "gulf" between pump price/gallon and the benchmark crude/barrel defies the expectations of consumers . Are the refiners price gouging ?
Last summer it was $4/gal. How does $3/gal seem the same?
Oil companies loosing money? Don't worry, congress will pass a new corporate welfare bill to help those poor companies out!
11
Then why did Obama give Shell permission to drill in the Arctic?
5
Think long term not hurt term. Low oil prices won't last forever. Unlikely over 2-4 years.
Forced to comply with a court order to comply with a contract signed by another administration (guess who?)
Because in this one instance they actually followed the law, as unusual as that might seem.
Maybe an interesting fact that many people are ignoring: current world production of oil is about 96 million barrels per day, and world consumption of oil is about 94 million barrels per day. Therefore, the current drop in oil price is caused by a surplus of a mere 2 million barrels per day.
The question is not whether world production and consumption of oil will keep on rising (they will); the question is how long this surplus will remain.
The question is not whether world production and consumption of oil will keep on rising (they will); the question is how long this surplus will remain.
1
Was the placement of this article right under the article on California's coming environmental implosion purposeful?
2
Excellent!
We should all go buy 2 huge SUVs and a 4,000 square foot mansion and then be surprised when prices rise.
Oh, and since we'll be even more dependent on oil we should drill in the arctic, run a pipeline through a massive Midwestern aquifer, and Bomb Iran.
Insanity
We should all go buy 2 huge SUVs and a 4,000 square foot mansion and then be surprised when prices rise.
Oh, and since we'll be even more dependent on oil we should drill in the arctic, run a pipeline through a massive Midwestern aquifer, and Bomb Iran.
Insanity
7
So why are the prices so high at the pump? Why can't we have an investigation into that? Oh yeah, I forgot - the Koch brothers...
7
Then why the heck does Shell insist on exploring the Arctic? Can't we leave that pristine part of the world free from the dirty business of oil exploration and production?
12
Well Gee they are a corporation that tries to make money for their investors. That is the reason, and the business can be done properly.
Great news, though I don't trust the oil companies not to find some other ways to ruin the environment.. Or maybe now they will put their fossil fueled muscles into moving the renewable energy industry to fast forward.
2
I foresee the oil industry peddling to Congress a too-big-to-fail bailout scenario, with Republicans leading the charge claiming apocalyptic national security concerns as their motivation. Obama will be branded as treasonist for not protecting American and our allies oil interests around the globe, directly linking the Iran deal as evidence of Obama's collusion with terrorist nations in destroying America. How else could we avert the collapse of civilization?
Wait, why do parts of this sound so recent?
Wait, why do parts of this sound so recent?
5
So why was it necessary for Obama to open the Arctic to drilling?
35
Symbolic, perhaps. A sop to oil interests. Do you think that there is going to be any serious drilling in the arctic with oil prices so low? Probably not.
Further our independence on mid east oil?
You know what? As long as it shuts up that "Drill, Baby, drill!" crowd it's fine by me. If Shell's results this year are no better than their past fiasco then we have nothing to worry about.
With crazy low $40 barrel prices for crude, where are savings for consumers for car gas and for plane fares?
8
Why do you think that savings should go to the consumer? How about they go to the owners? Airlines have lost money for a long time and now need to make money. Simple economics in a free market economy.
Clifford Krauss does not mention the most significant aspect of what's happening, world wide: deflation. Why not?
For those that wish to understand deflation, deflation of oil, deflation of the common denominator, namely currency, competitive devaluation of currency, deflation's impact on bonds and debt instruments of every maturity, quality, and denomination, equity or shares in all markets, real estate, deficits, the US economy, European economy, the Russians and Putin's grasp for power and dominion in the face of declining fortunes, deflation's impact on the US tax payer, on pensions' claim on the tax base, deflation's meaning to the oil sector, deflation's meaning to medicine and drugs, deflation's reach into the political arena where Trump is yelling about walls and illegal immigrants, deflation's impact on The New York Times, the world's best, on Slim, the owner of a significant piece of the non-voting shares, on Bloomberg News and Mr. Bloomberg, on US banks, the need for reigning in the US deficit as deflation drives up the value of the dollar, or the FED continues to water the dollar to make repaying the debt less difficult.... if Mr. Clifford would like to learn what needs to be stated in regard to what's happening, let's open the dialogue and tell the American reader and the international reader right here in the pages of The New York Times... now, please. We are heading to deflation. Now. This sis not the time to blink. We must ask what matters. Now. Sandy Lewis
For those that wish to understand deflation, deflation of oil, deflation of the common denominator, namely currency, competitive devaluation of currency, deflation's impact on bonds and debt instruments of every maturity, quality, and denomination, equity or shares in all markets, real estate, deficits, the US economy, European economy, the Russians and Putin's grasp for power and dominion in the face of declining fortunes, deflation's impact on the US tax payer, on pensions' claim on the tax base, deflation's meaning to the oil sector, deflation's meaning to medicine and drugs, deflation's reach into the political arena where Trump is yelling about walls and illegal immigrants, deflation's impact on The New York Times, the world's best, on Slim, the owner of a significant piece of the non-voting shares, on Bloomberg News and Mr. Bloomberg, on US banks, the need for reigning in the US deficit as deflation drives up the value of the dollar, or the FED continues to water the dollar to make repaying the debt less difficult.... if Mr. Clifford would like to learn what needs to be stated in regard to what's happening, let's open the dialogue and tell the American reader and the international reader right here in the pages of The New York Times... now, please. We are heading to deflation. Now. This sis not the time to blink. We must ask what matters. Now. Sandy Lewis
2
Mark's ex
Congratulations America! You guys did it, and did it fast! After Sept 11, 2001 most American leaders, public officials, patriotic businesses and the general American public decided that dependency on Middle East oil is going to end. And they worked hard to achieve that: through investments in alternative energy ; domestic drilling ; looking for oil outside the ME area ; energy conservation and even lifestyle changes to reduce fossil fuel dependency as well as reduce carbon footprint. This is America at its best.
In less than 20 years America has reduced its dependency on ME oil to less than 50%. Wonder how the Saudis and other oligarchs, who sell oil for their survival, luxury, power and global control or influence, are going to take this. Of course they are getting very cozy with China (which still needs their oil). But China and India could do with cheap oil, less imports and less fossil fuel dependency too. India needs to spend and invest more on solar, wind and other alternative energies that are possible in its amazing sunny, humid and windy environment with a large coast.
Anyway, this news shows that America is still a great problem solver, and is very good at focused kicking out guys who Americans do not like or trust ....even in business. Something other countries can learn from.
Again, congratulations America!
Congratulations America! You guys did it, and did it fast! After Sept 11, 2001 most American leaders, public officials, patriotic businesses and the general American public decided that dependency on Middle East oil is going to end. And they worked hard to achieve that: through investments in alternative energy ; domestic drilling ; looking for oil outside the ME area ; energy conservation and even lifestyle changes to reduce fossil fuel dependency as well as reduce carbon footprint. This is America at its best.
In less than 20 years America has reduced its dependency on ME oil to less than 50%. Wonder how the Saudis and other oligarchs, who sell oil for their survival, luxury, power and global control or influence, are going to take this. Of course they are getting very cozy with China (which still needs their oil). But China and India could do with cheap oil, less imports and less fossil fuel dependency too. India needs to spend and invest more on solar, wind and other alternative energies that are possible in its amazing sunny, humid and windy environment with a large coast.
Anyway, this news shows that America is still a great problem solver, and is very good at focused kicking out guys who Americans do not like or trust ....even in business. Something other countries can learn from.
Again, congratulations America!
1
How about a (temporary?) moratorium on fracking and off-shore drilling? I'm sure that would significantly lower U.S. oil and gas output, and maybe raise fuel prices a little bit. It would be good news for the environment. Sounds like we can afford to slow down on our raping and pillaging of the environment for a while.
4
Like Netanyahu, the oil monsters have overreached. We are still far too dependent on them, but less, at least.
Remember, from the first time Nixon created the original phony oil panic in 1972, it was to pay off a political debt to his Texas oil donors. Their colossal fortunes (and those in the Middle East) are all about American politics.
Remember, from the first time Nixon created the original phony oil panic in 1972, it was to pay off a political debt to his Texas oil donors. Their colossal fortunes (and those in the Middle East) are all about American politics.
1
Good. The oil companies have raped the world for decades. They told us if the Alaskan fields were opened, we'd not need oil from he middle east. The frack right by farms in WVA. They destroy. They lie. They make billions. Let the not make billions now and let the oil prices stay low.
4
Hopefully this will shutdown the carbon-spewing and the toxic earth-scorching Canadian oil sands nightmare and any further insane ideas of a pipeline.
8
Hope in one hand and use reality in the other and see what you get. Nothing is shutting down the oil sands. In fact eventually we will be doing the same with tar sands.
Oil low and the economic slowdown will contribute to better environmental performance it is not clear why President Obama wants to spend licenses to Shell to drill The Arctic the world has enough energy to power a world in the next decade Save of Arctic America
2
Although the price of a barrel of oil has fallen significantly and the world is awash in a glut of that precious commodity, the prices at the pump in many States specially out here in the West have not fallen in the same proportion. The problem: Lack of refining capacity. It is to the Oil Companies' advantage to keep that as is: they simply raise prices at the pump and continue making profits. THey will shut down exploration and new oil field production as needed and lay off as many employees as the bottom line demands without batting an eye. Demand for petroleum products is seasonal, and always has been: and so is the basic truth, whether there is an oil glut or scarcity, oil companies will continue to rake in billions in profit. The powers that be in Washington will utter empty promises about energy independence, etc. but also welcome the added revenues from the increased taxes we all pay at the gas pump.
Oil Companies are in the business to make profits, billions upon billions. They do not care about the environment, their workers, or what you pay at the pump. They will make profits whether there is a glut of oil or scarcity.
That being said, lets do everything to protect the environment and stop the contamination of our water supplies and the air we breath. Whether those regulations add to the price at the pump is irrelevant: the powers that be will continue making billions in profits regardless.
Oil Companies are in the business to make profits, billions upon billions. They do not care about the environment, their workers, or what you pay at the pump. They will make profits whether there is a glut of oil or scarcity.
That being said, lets do everything to protect the environment and stop the contamination of our water supplies and the air we breath. Whether those regulations add to the price at the pump is irrelevant: the powers that be will continue making billions in profits regardless.
22
"It is to the Oil Companies' advantage to keep that as is: they simply raise prices at the pump and continue making profits" "THey will shut down exploration and new oil field production as needed and lay off as many employees as the bottom line demands without batting an eye."
Best comment here.
Best comment here.
2
California hasn't opened a new refinery, but it wasn't because the companies didn't want one. NIMBY.
So then, I take it that you are suggesting that if you are an investor then invest in a business that makes oil tanks for oil storage? If the oil companies cannot refine the oil that has already been pumped out of the ground because the refineries cannot handle that kind of output then the oil must be stored above ground in tanks until it can be refined. Or it can be stored offshore in oil tanker vessels, much like Iran did with their oil until the international sanctions were lifted. Now they have added their billions of gallons onto the market as well. Now there is an oil glut of massive proportions.
I wonder if the growing impact of renewables in power generation and the increasing numbers of electric and mileage-efficient cars is finally beginning to make a dent in overall demand for oil.
It could also be the trigger to make some oil giants divert some of their enormous cash reserves from oil extraction towards renewable energy. It would be good for our planet and it would be good for the oil giants too, which, let's not forget, provide hundreds of thousands of jobs and could be a force for the good of the planet, if only they committed their human talent and financial resources to it.
It could also be the trigger to make some oil giants divert some of their enormous cash reserves from oil extraction towards renewable energy. It would be good for our planet and it would be good for the oil giants too, which, let's not forget, provide hundreds of thousands of jobs and could be a force for the good of the planet, if only they committed their human talent and financial resources to it.
2
As many have already mentioned, this is welcome news for many reasons. This would also be the perfect time to increase the gas tax. It would benefit us in two ways: by supplying much needed money to repair our crumbling infrastructure and secondly to offset the corresponding rise in carbon emissions as more people drive because gas is so cheap.
2
When does this oil glut begin the show at the gas pump? Here in southwest Ohio, the price at the pump yesterday was $2.899, slightly down from the day before at $2.949, but still up from a couple of weeks ago. Refinery maintenance is the excuse (again). How long will the majors be able to maintain their fictions?
1
Why haven't we seen price reductions at the pump?
If both parties weren't owned by the oil companies there would be an investigation over collusion.
If both parties weren't owned by the oil companies there would be an investigation over collusion.
18
Wonderful news!
Reading this in drought stricken California, I have the malicious thought of oil barons begging to trade their oil for a drop of water. Let them drink oil and try growing life sustaining crops with oil. What the oil men do is produce death.
Reading this in drought stricken California, I have the malicious thought of oil barons begging to trade their oil for a drop of water. Let them drink oil and try growing life sustaining crops with oil. What the oil men do is produce death.
1
I don't know anyone in the oil business, but I've got a question for you. Why do you hate? Is it because you use their products and can't stop? You are on the web (electricity) using a computer (plastics). If you don't want to improve their profits or use awful fossil fuels there is an answer. Get off the grid! If enough people do so, and eschew anything made from fossil fuels then the businesses are sure to go under. You can all work on alternative sources, like wind or solar. It's a win-win!
But most likely you are still driving your car.
I'm trying to feel sorry for the people in the oil business but it's difficult when I consider the decades when they couldn't count their money fast enough while the rest of us struggled with the high price of fuel
1
And yet the republicans in the congress want to sell 101 million barrels of oil from the Strategic Petroleum Reseve to raise $9 billion for the Highway Fund.
That Norquist Pledge sure does motivate some very, very stupid ideas.
Let the market drive the price! A glut is a great time to unload.
That Norquist Pledge sure does motivate some very, very stupid ideas.
Let the market drive the price! A glut is a great time to unload.
4
The fun begins when it drops to about 20 $$$ and all subsidies in petro rich countries are revoked.....
3
When crude was going for $110 / barrel, Alaska busily socked away a *lot* of money into rainy day funds. The state is so heavily dependent on oil to fund the government that state revenues dropped some 60% in the last year and are still falling. Unless they decide to start making residents pay taxes (god forbid!), the rainy day funds will be gone within 2-3 years. In their infinite wisdom, they never thought about diversifying their economy while times were good. I suspect there's going to be a mass exodus from the state over the next few years. It's like watching a slow-motion train wreck.
3
Sounds like Alaska was forward thinking by creating the rainy day fund, actually.
1
Aw,gee, Shell and Exxon-Mobil will still pay no taxes, complain about low quarterly profits, {only $4 billion this quarter} and get their congressmen to cry crocodile tears! BooHoo
2
Julian Simon proved right again. Of course, being stupendously wrong does not disqualify someone from obtaining a position of responsibility. See John Holdren.
JD
JD
1
And where are those Republicans that were jumping up and down about Obama causing the oil prices to rise...oh yeah crickets. What a bunch of hypocrites!
2
Then why give permission to Shell to drill in the Artic, Mr. Obama?
3
Those leases are not going anywhere. We can sell them later. Meanwhile, use what we have. The Western Hemisphere is pretty stable, has infrastructure, is not in economic chaos, for the most part, and has plenty of food and water, and no war. We are dripping in oil. Have a great day.
1
It has always been a bad idea to subsidize the Prius, the Tesla, and the solar industry, hasn't it?
Solyndra.
Lower profits for oil companies isn't a bad thing, lower prices for oil related energy and products are. This is the time to enact a "cost of extraction" tax on these companies to put the true cost of fossil fuels up against non-polluting alternative energy sources.
4
The corporations need gas prices to be low by the holiday shopping season so that consumers spend more money and boost those fourth quarter earnings. The price-lowering process begins now, early in the supply chain, so that gas prices at the pump are falling around the same time the annual "Lower Gas Prices by Christmas!" articles pop up in mid-October. It happens every year without fail.
7
The global collapse in oil prices is not some conspiracy by u.s. retailers, if that's what you are implying. Seriously?
1
Yes but it often doesnt happen at all like that because consumers dont want to spend, or there is a large and bad storm in December, etc. I see your point though.
This news has mixed blessings. While it puts a damper on new development, it doesn't stop it, nor slow down production or usage. In the US and worldwide there is more cheap oil than ever.
I think $100 a barrel oil did so much more to force people to think about efficiency and alternatives. It also provided a lot more good paying jobs in a variety of industries.
Cheap oil, and coal for that matter, could allow backsliding to wasteful and polluting ways. It definitely is costing jobs. It is causing economic and political instability in a world that doesn't need more.
I think $100 a barrel oil did so much more to force people to think about efficiency and alternatives. It also provided a lot more good paying jobs in a variety of industries.
Cheap oil, and coal for that matter, could allow backsliding to wasteful and polluting ways. It definitely is costing jobs. It is causing economic and political instability in a world that doesn't need more.
2
As we consume more solar, oil keeps dropping. Enough said.
4
Interesting, according to another recent NY times report, market forces are killing off coal. Good riddance! Ironic, though. Remember "Drill baby, drill"? Well we did that, and look where it got us. I'd say it's a win win, bring on the renewables...
3
40 dollars per barrel is more than zero for not drilling. Pretty simple huh?
The market is manipulated by controlling production.
The market is manipulated by controlling production.
Didn't get enough history in school, huh? Look up the countries that tried to control production of anything in the past. I'll give you a hint: try communism in google.
The pipeline will create thousands of jobs, but those will all be in Canada. The pipeline will need less than 100 US workers after it's finished.Meanwhile US oil field workers are already being laid off by the current oil glut and oil piped in from Canada will give it a competitive advantage over our fracked oil which is largely being moved by rail. The pipeline is a US jobs killer. If the GOP is real about wanting to create US jobs it would be in favor of a pipeline to N. Dakota instead of the XL Keystone boondoggle.
3
Congress should let us export oil and gas.
Congress should fill the Strategic Petroleum Reserve.
Congress should tax coal and use some of the tax money to help displaced coal miners.
Congress should fill the Strategic Petroleum Reserve.
Congress should tax coal and use some of the tax money to help displaced coal miners.
Displaced so called coal miners should find different professions , rather then dirty work that they have chosen. As far for the rest there appears to be vast amount of natural gas, Where by most automobile engines should be converted to natural gas, which is not only better economically, but less polluting.
1
Well now, the rationale used by Shell Oil to drill in the Arctic is just so much rubbish then!
3
Disappointing. We really needed Peak Oil to motivate us to get off of fossil fuels. Now the market is telling us to Burn, Baby, Burn.
Wouldn't it be ironic if Peak Oil shows up just after our goose is definitely cooked.
Wouldn't it be ironic if Peak Oil shows up just after our goose is definitely cooked.
1
The goose was cooked several years ago. Our species has a disease of the mind: we cannot anticipate future outcomes and consequences; we cannot organize information to solve problems; we cannot monitor our behavior; we cannot delay gratification. We are unpredictably self-destructive and violent. Our disease is like rabies; we are infected and the disease must incubate and progress to systemic debilitation and insanity before it kills us.
Then why did Mr. Obama disappointingly approve drilling in the arctic? I don't get it.
5
The energy industry is like a cancer that sucks money out of our economy. They generate obscene profits at the expense of all other market participants. We are far better off with low energy prices that allow manufacturers and consumers to engage in the marketplace, creating jobs and innovation.
I would not be too gleeful. This is about supply - abundant natural gas (from new drilling technologies, especially 'fracking') and excess capacity are the sources of a diminished auction settle for these leases and the lower price of oil. This does not imply reduced demand or lower consumption. Production capacity will correct. What we need to do is dampen demand for fossil fuels, including natural gas, and that is not what's been reported here (nor what is happening in fact, as far as I know - reduced prices do not mean less oil or natural gas or gasoline at the pumps is being sold and then combusted for energy).
3
Good! Keep as much as possible of this stuff in the ground. We have a planet to save.
2
Low oil prices are not quite as rosy as they seem. Huge investments made in energy, which substantially helped the U.S. pull out of the recession (remember that?), require interest and low oil prices can cause dividend & interest payment suspensions, bankruptcies, layoffs and home foreclosures. Our country, with its mediocre GDP growth and huge run up in debt is still vulnerable. And other countries, which depend solely on oil revenue, could be forced into a corner and become desperate . A cornered animal is usually not very friendly. Yes, gas is cheap, but it's not that simple.
2
Finally, the tipping point is at hand. Now let's see what happens in the Middle East with Iran's supply coming on line. Could we see some strange new political developments to complicate the region even more?
4
Since this is the case why is Shell going to drill in the Arctic?
1
Precisely. I can't comprehend why Shell is so eager to drill there.
Although I understand the jubilation over the news, this hits close to home for me, literally. My two sons are now out of work in an area where it is very difficult to find good-paying jobs, and I can't help but worry their futures. Please try to remember the human cost of this decline.
4
Let's also keep in mind the potential cost in human lives if we continue to despoil the planet.
I agree with you. Many people's income rely on the oil industry. As do the financial well being of many countries, and I am not referring to Saudi Arabia, but to the island nation of Trinidad and Tobago which receives much of its income from state run oil and gas drilling and refining. As the price drops so does T&T's projection for growth, which puts a tremendous burden on pensioners, government workers (most people work for the government in some fashion), medical services, and education.
This would be an excellent time to begin to raise federal gasoline taxes. That would mean more money for rebuilding infrastructure while having little effect on the economy since prices are already low. If a rise in oil prices causes a spike in the cost of gasoline, the tax can be temporarily reduced so the spike is not so severe. Think of it as saving for a rainy day.
10
Gas prices should reflect the cost of oil, below $2 per gallon.
1
Its interesting how people, mainly those who hate capitalism and decry "income inequality", criticize the oil companies for making money, yet come to their defense when they don't. All I know it is good for the consumer who does not pay a lot at the pump. Cheers!
1
Drill, baby, drill! Unless it's not to your advantage, of course.
Some people here are saying that this is good for the environment. Maybe. To the extent the problem is demand-driven, then it might indicate (but not cause) a somewhat better future than we might have expected for the environment, since low prices would reflect lower demand.
On the other hand, some of the oil glut is supply-driven. The US has increased oil production; OPEC won't cut production. If low prices are the result of too much supply relative to lower demand, then cutting costs will just result in greater demand for oil. Oil prices were very low for about 10 years from the mid-80s to the mid-90s. That period reversed consumer patterns in favor of smaller cars and discouraged businesses from investing in energy-efficient capital.
On the other hand, some of the oil glut is supply-driven. The US has increased oil production; OPEC won't cut production. If low prices are the result of too much supply relative to lower demand, then cutting costs will just result in greater demand for oil. Oil prices were very low for about 10 years from the mid-80s to the mid-90s. That period reversed consumer patterns in favor of smaller cars and discouraged businesses from investing in energy-efficient capital.
8
Well said, I wrote and posted an article on Mon Dec 24, 2007 criticizing the politicians lack of courage in environmental policies, it remains as relevant today as when I wrote it. The post subject: Candidates shy away from "C" word, I find it a shame that none of the Republican Presidential candidates or president Obama in his State Of The Union address have mentioned any real innovative initiative concerning energy conservation.
With some minor changes to the way we live a lot of energy could be saved but that would cost big business a lot of money and reduce the GDP. The article below delves into the issue Obama is trying to raise as he jets back and forth across the world burning fuel in his massive government plane. I propose the President considers thinking about playing golf a little closer to home.
http://brucewilds.blogspot.com/2013/06/presidential-climate-change-initi...
With some minor changes to the way we live a lot of energy could be saved but that would cost big business a lot of money and reduce the GDP. The article below delves into the issue Obama is trying to raise as he jets back and forth across the world burning fuel in his massive government plane. I propose the President considers thinking about playing golf a little closer to home.
http://brucewilds.blogspot.com/2013/06/presidential-climate-change-initi...
good. Maybe loss of profit might finally save the planet. The evidence in front of us has not been enough thus far to stop all this, even as the storms and disasters come faster than we can rebuild,
21
Save the planet? What do you mean, specifically, when you say save the planet? This planet has been in existence for over 4.5 billion years and has withstood much greater challenges than it now faces, and would face with even greater CO2 emissions (not that I am advocating that).
In my opinion thinking that the planet is at risk is equivalent to thinking it is only 6,000 years old.
Intelligent conversations can only take place in the absence of hyperbole.
In my opinion thinking that the planet is at risk is equivalent to thinking it is only 6,000 years old.
Intelligent conversations can only take place in the absence of hyperbole.
1
Bruce – no doubt planet Earth will survive, for a long while, anyway. What about the inhabitants?
1
The slide in world oil market is a blessing in disguise as far as the environmental worries are concerned; for what political leaders failed to do seems to have been done by the much maligned market itself.
25
No, sir, a blessing would arise from reduced oil consumption, and that is not a forecast. Low prices have the opposite effect. If there is a blessing, you have not expressed it.
1
Oil not so profitable now?
I'm grief-stricken, Buster, and how,
Less carbon emission
Koch fortune attrition,
To oil price collapse they must bow.
I'm grief-stricken, Buster, and how,
Less carbon emission
Koch fortune attrition,
To oil price collapse they must bow.
57
Unfortunately the Koch's are diversified in chemicals, lumber and many other industries so the drop in oil prices hobbles only one of their tentacles.
1
Hopefully we can throw in some Iranian oil and see prices below $20 a barrel in 2 years. Although, why do I have a sick feeling I'll STILL be paying over $3.00/gallon for gas in California?
24
The upstream (production) and downstream (refining) sectors of the oil and gas industry are two separate supply chains. The price of crude is not directly related to the price of gas at the pump. Rather, the price of gas is related to the capacity of the refineries that service the California area (e.g. Chevron's El Segundo refinery).
Simple supply and demand here. Currently, most refineries are running at full capacity to meet the demand. With supply capped and demand growing, price of gas is only going to go up. Take the Chicago area for example here. In the past few days, gas prices have gone up around 70 cents per gallon. Why? Because the largest Crude Unit in the BP Whiting refinery in Indiana went down for repairs.
Simple supply and demand here. Currently, most refineries are running at full capacity to meet the demand. With supply capped and demand growing, price of gas is only going to go up. Take the Chicago area for example here. In the past few days, gas prices have gone up around 70 cents per gallon. Why? Because the largest Crude Unit in the BP Whiting refinery in Indiana went down for repairs.
Exactly, but (especially in CA) at least we'll have alternatives, ethanol, hybrids and electrics.
$3.00 ? You must live in Southern California.
Almost $4.00 here in the North.
Where is that cut in prices? I want my $2 gas!
Almost $4.00 here in the North.
Where is that cut in prices? I want my $2 gas!
Yes, and now we will see lower airline prices!!!!!
19
Don't cheer for that. Discretionary travel is another contributer to global warming. Do the planet a favor and stay home more.
1
Mike:
never. They will continue to nickle and dime us, crowding us into disgusting small, narrow seats.
But I hope YOU ARE RIGHT.
never. They will continue to nickle and dime us, crowding us into disgusting small, narrow seats.
But I hope YOU ARE RIGHT.
1
yes, right!
As oil prices fall other things rise. Americans have more disposable income. Transportation stocks like United Parcel (NYSE: UPS), FedEx (NYSE: FDX) and airlines. like Southwest (NYSE: LUV) . JetBlue (NASDAQ: JBLU) etc will all benefit.
Moreover, this does more damage to Putin's Russia and Iran which keeps their imperialistic tendencies in check.
I am all for falling oil prices.
Moreover, this does more damage to Putin's Russia and Iran which keeps their imperialistic tendencies in check.
I am all for falling oil prices.
30
Let's see if United Parcel (NYSE: UPS), FedEx (NYSE: FDX) and airlines. like Southwest (NYSE: LUV) . JetBlue (NASDAQ: JBLU) etc will pass on some of the savings onto the consumer and some of the profit to their workers.
Soon our brave American capitalists will ask for a government bail out. Closet socialists.
70
Bet, the next round of quantitative easing will see Fed buy oil company paper, especially the junk variety.
1
The Energy Departments forecasts always seem to be well behind the curve. The process appears to be less forecasting the future than curve fitting what's obvious to one and all. If prices go down, the Energy Departments keeps lowering forecasts, always perfectly one step behind observable reality. Ditto on the way up. But before picking too much on our bureaucrats, whose need to be accurate is cushioned by a federal pay-check, let me hasten to add that private industry brokerage analysts are in an extremely tight competition to minimize the relevancy of their output. By profession a bit more optimistic, their forecasts of oil patch companies' price targets hover always in a perfect parallel above the actual prices of their corporate charges. Meaning if the price of the company keeps on dropping, they subsequently duly lower their target, rather than alerting investors ahead of time that things are likely to get far worse. Like after you are coming in drenched from a downpour warning you of the heavy rains.
8
If this is true, why is Shell being granted access to drill in the Arctic? It does not compute.
98
You anticipated my question.
High cost, high risk both to drillers and the environment, questionable returns, and the taxpayer standing by in Coast Guard vessels to, quite literally, bail them out.
Private profit, public cost: one vector of inequality.
High cost, high risk both to drillers and the environment, questionable returns, and the taxpayer standing by in Coast Guard vessels to, quite literally, bail them out.
Private profit, public cost: one vector of inequality.
1
Because the lease for Shell's Arctic drilling was awarded years ago when prices were still fairly high. Shell really only has two options here:
1. accept the lease as sunk cost
2. move forward with drilling and get to first oil before the lease expires and potentially go to someone else.
Considering how much oil is projected to reside in the Arctic, clearly Shell decided to go with option #2.
1. accept the lease as sunk cost
2. move forward with drilling and get to first oil before the lease expires and potentially go to someone else.
Considering how much oil is projected to reside in the Arctic, clearly Shell decided to go with option #2.
Yes it does compute, when you're thinking long term and not just next year.
No matter how low prices go, somehow I fear that during the coming New England winter I will be charged the same top dollar for heating oil as I've always been.
27
Shop! Go to a market based floating rate. My Irving price in Vermont, negotiated through a buyers coop, is now around $2 a gallon.
7
You can buy heating oil on the open market for $1.90/gal. today. Try "shopping" for oil when supplies are artificially tightened.
Last winter, at the market low, I paid as little as $2.18 through the buyers coop negotiated price.
So why was the United States even offering oil lease in such a depressed market, rather than waiting until the market improved in 2017 or beyond? It is not like the government doesn't have enough money for its needs and to supply liquidity. So why lease at such low prices, and thus create losses for the American people?
19
Keep prices steady to avoid job losses, increase gas taxes to pay for roads, bridges, and a transition to a solar based energy strategy.
58
Oil company owners will make their profits by inflating oil and gas prices. Solar will benefit.
12
The oil business has been a boom-or-bust thing since Spindletop (maybe before). It's interesting that no one has pointed out that the upside of low oil prices is that the feedstock of the refining and petrochemical industries is now cheap. Some win with low oil prices; others lose. Nothing changes there. Unfortunately, a lot of people work in the exploration, development and extraction side of the oil industry -- but few folks work in refineries and petrochemical plants. One consolation is that low oil prices hit Putin's gang of thieves pretty hard; maybe the Russian people will wake up to the fact their hero can't control oil prices any more than Barach Obama (or Donald Trump) can. Maybe Putin will wake up and stop waging low-intensity wars with his neighbors? In any event, what goes down will eventually go up. Booms eventually follow busts.
10
Those with memories left can recall right wing chants for "drill baby drill" when gas prices climbed past $4 per gallon. Well, at least here in Cali we've found the search for lost memories at the pump with $4 per gallon again despite oil pouring out of our national orifice. If any drilling is to be done it could start with relieving pressure on right wing skulls. You know, the guys who enable Big Oil to charge what it wants at the pump, glut or no, and put the lie to laws of supply and demand which it controls anyway.
29
Yeah, kind of wonder how they are holding the price where it is. Barrel has 55 gallons. So at $40 per barrel this means each gallon is worth $.73 per gallon, pre refining. So let's say you can only get 40 gallons per barrel in refined products that can be made into gasoline. Mass produced this should put us at about $1.50 per gallon. Give the dealers a mark up, gasoline should be about $2.00, including taxes. My math and analysis off of a napkin. But then again, that is where supply side economics came from too.
This is all good news. It makes the XL pipeline irrelevant and hopefully will shut down the ridiculously expensive and damaging shale oil operation in Alberta, Canada.
Shell may also have second thoughts about wanting to drill in the Arctic.
On the other hand, Texas, Oklahoma, and other states that depend on quick money from drilling will intensify the opposition to the Iran deal, because once the sanctions are lifted, Iran’s oil will add to the surplus.
Efforts to rid ourselves from dependence on oil are beginning to have an effect. Cars are more fuel efficient and the younger generation is finding alternative ways to get around and communicate. Let’s celebrate this trend and support it!
Shell may also have second thoughts about wanting to drill in the Arctic.
On the other hand, Texas, Oklahoma, and other states that depend on quick money from drilling will intensify the opposition to the Iran deal, because once the sanctions are lifted, Iran’s oil will add to the surplus.
Efforts to rid ourselves from dependence on oil are beginning to have an effect. Cars are more fuel efficient and the younger generation is finding alternative ways to get around and communicate. Let’s celebrate this trend and support it!
192
I think the threat of the Iranian oil has been an unmentioned factor all along, with the opposition. It's hard to say "No! Gasoline prices will fall too low."
Did you mean "tar sands operation in Alberta" when you mentioned "shale oil" ? Even before the recent collapse of oil prices, the introduction of fracking and the exploitation of shale oil was cutting into the profits of the operations in Alberta, resulting in the "bitumen bubble" as far back as 2013.
Could this be a sign that global markets are moving away from hydrocarbons?
Probably not, but at some point (despite the Koch Brothers' claims) we, as a human race need to find another source/s of energy to continue our increasingly complex and energy interdependent lifestyle. As in any other financial windfall, it is best to be in at the ground flood.
If we keep relying on the old, we can never invent the future (someone else's quote, maybe).
Probably not, but at some point (despite the Koch Brothers' claims) we, as a human race need to find another source/s of energy to continue our increasingly complex and energy interdependent lifestyle. As in any other financial windfall, it is best to be in at the ground flood.
If we keep relying on the old, we can never invent the future (someone else's quote, maybe).
19
As prices fall, smaller financially leveraged producers must try to pump even more in order to meet their debt service. When they finally throw in the towel, stronger financial hands will take them over. In the end, this will put even more of the US oil production into the hands of Exxon Mobil, Shell, and the other mega oil operations.
This sounds like the kind of market squeeze that John D Rockefeller used to use to ruin, and then take over, his competitors.
This sounds like the kind of market squeeze that John D Rockefeller used to use to ruin, and then take over, his competitors.
17
I think it's the Saudis now, with US complicit, as it hurts Russia.
With oil prices so low, why is the DOE conducting auctions at all, giving away leases at bargain basement prices?
Is there a legislative mandate, bad judgement by the DOE or some other corrupted political process?
Is there a legislative mandate, bad judgement by the DOE or some other corrupted political process?
16
Why do we need drilling in the arctic then...
77
It's the long game. How can the titans of oil assure that their families will be perpetually rich without looking ahead a few decades?
Oh yes, I weep for ExxonMobil....
29
Remember the Republicans chanting "drill baby drill"? Now they'll blame over-supply on the president.
13
If there is glut and the price per barrel is at an all-time low, why is it still $4 a gal in California? The other sad part about this is that people will probably go out and buy MORE SUVs to hog the road and generate more bad air and later when the price goes up,they will hold on to these "boats" because they can't sell them for more economical cars.
10
Where in California have you seen $4. gas? It's been north of that for as long as I can remember.
1
...or Americans, for that matter.
As the melted ice and warmer oceans yield some more "Superstorm"s, we won't stand in the way for long either.
But hey at least we'd've got twenty remaining years of oil to supply ten remaining years of humanity.
As the melted ice and warmer oceans yield some more "Superstorm"s, we won't stand in the way for long either.
But hey at least we'd've got twenty remaining years of oil to supply ten remaining years of humanity.
6
Dare I utter the words? $1.00 a gallon, here we come! We'll pump gas while Rome burns.
8
Well when a hurricane or two hits or another war breaks out, the usual price hike will kick in needed or not. My question is why airline prices have soared so much? We get a break on one end and then gouged on the other end.
11
Are the giant oil companies in a common plan with each there to take step toward keeping prices high by restricting supply?
1
Perhaps an opportune time to raise the gas tax that has been stagnant for decades. Use the money to fix the crumbling roads and bridges.
170
Raise the gas tax and fix the roads!!! Recommend x50!
9
Won't happen. The American public will have to approve and they will not.
No gas tax increase, newton, until WE make them close the loophole that allows business to write off the cost of vehicles, and gas, as a "business expense". Until then it's the rest of us footing their bills. NO MORE.
"One outgrowth of that surplus is the challenge of where to put all the oil."
Why, into the atmosphere of course!
Why, into the atmosphere of course!
19
What can one say? It couldn't happen to a nicer bunch of people.
35
I assume you rode your bike, parts of which are made from oil based products, to the store when you bought the computer, the skin which was made with oil based products and shipped from Asia on a vessel powered by wind while the energy to power your computer was all solar, once again the solar cells were probably made with products that are oil based and shipped from China. No I don't care for oil companies either, but sadly realize the bulk of everything around us is probably made from oil based products.
4
Oh right and you had SO much sympathy for the Detroit auto worker when the auto industry was going bankrupt? Many, many people said "tough luck, let them retrain for other jobs, its the way of the world, etc." ...... well DON'T expect ANY sympathy from me for oil companies and their workers.
OK, why are they going to drill in the Arctic?
50
Because it makes sense to plan a decade or more in advance when prices will probably have rebounded. The arctic is a long term opportunity.
1
Hopefully this will mean that more people up here will be able to afford to heat their homes this winter.
13
Those that will bear the brunt of the glut will be the employees of these oil companies. The companies are ruthless. I recently was told of a Chevron employee with 28 years of experience being laid off. These companies should be ashamed of themselves.
7
And yet they just got the go ahead to ruin the Arctic.
29
I have it on good authority from a conservative aquaitance that renewables will never replace oil so I would suggest buying oil futures. On the other hand, his grandfather made a strong play on whale oil over crude and lost every penny he had.
9
Oil glut? Gas is $3.50 a gallon plus in this area, prices went up almost $1 a gallon overnight recently. Still the biggest con game around. No one's hurting except the drivers.
8
If we had a Congress intent on anything else than playing politics and endlessly investigating emails and Benghazi, it would be a good time to raise the gas tax 10 cents and repair the bridges, the highways, upgrade the railways and outdated airports.
65
Most countries produce output that is a reflection of the strength of their society: merit, hard work, intelligence, insight.
Countries that produce raw materials, like oil, receive monetary reward, but it is not a reflection of the strength of their society and its values. It's just dumb luck.
So we have countries like Saudi Arabia, with medieval barbaric ideas that stay in place, unchallenged. Because there is no reason to change: they are rich by doing nothing. If there were never any oil in Saudi Arabia, the country today would be poorer, but more modern and fair. The children of poor desert camel herders would want to be richer and so would create societies that value something more than dusty old barbaric concepts. Medina and Mecca would be more cosmopolitan, women more free, ideas more open. Wahhabism would be laughed at as the sinister cruelty it is.
For this reason, it is almost a moral imperative that we stop using oil and devalue it as much as possible. Or societies like Saudi Arabia will continue to fund cruel ideas and export them and create much mayhem in this world.
Electric cars, feedstock for producing plastics and other chemicals from plant oils, etc. Through a combination of scientific advance and engineering feats we can wean the world from oil we dig out of the ground.
Let's make oil worth $1 a barrel.
Let a wave of social change from that fact make the world a better place. Let decrepit societies that exert no effort today, be forced to evolve.
Countries that produce raw materials, like oil, receive monetary reward, but it is not a reflection of the strength of their society and its values. It's just dumb luck.
So we have countries like Saudi Arabia, with medieval barbaric ideas that stay in place, unchallenged. Because there is no reason to change: they are rich by doing nothing. If there were never any oil in Saudi Arabia, the country today would be poorer, but more modern and fair. The children of poor desert camel herders would want to be richer and so would create societies that value something more than dusty old barbaric concepts. Medina and Mecca would be more cosmopolitan, women more free, ideas more open. Wahhabism would be laughed at as the sinister cruelty it is.
For this reason, it is almost a moral imperative that we stop using oil and devalue it as much as possible. Or societies like Saudi Arabia will continue to fund cruel ideas and export them and create much mayhem in this world.
Electric cars, feedstock for producing plastics and other chemicals from plant oils, etc. Through a combination of scientific advance and engineering feats we can wean the world from oil we dig out of the ground.
Let's make oil worth $1 a barrel.
Let a wave of social change from that fact make the world a better place. Let decrepit societies that exert no effort today, be forced to evolve.
27
Very bad news for humanity.
The fossils fuel industry is, until recently, the basis of expected "returns" to the ruling class (aka "shareholders") and state managers.
But the "family" struggle with the FIRE industry, (finance insurance, and real estate) is not rational, because capitalism is not rational.
The One Percent are not a unified oligarchy, they are violently competitive. And they really don't care how their status struggles affect the majority of humanity.
Nobody is in charge. But if you think that is good thing, you aren' thinking. The pressure on oil shareholders is not good news for "green industries." It is a prelude to war.
The fossils fuel industry is, until recently, the basis of expected "returns" to the ruling class (aka "shareholders") and state managers.
But the "family" struggle with the FIRE industry, (finance insurance, and real estate) is not rational, because capitalism is not rational.
The One Percent are not a unified oligarchy, they are violently competitive. And they really don't care how their status struggles affect the majority of humanity.
Nobody is in charge. But if you think that is good thing, you aren' thinking. The pressure on oil shareholders is not good news for "green industries." It is a prelude to war.
5
Every crisis is an opportunity. Whose opportunity will this crisis be?
My thesis is we can repurpose the exploration know how in the petroleum sector to manage sea level rise and other water issues.
My thesis is we can repurpose the exploration know how in the petroleum sector to manage sea level rise and other water issues.
1
I'm afraid of that too.
Some time in 2008 in Scottsdale Arizona, I overheard a kid, who was about 7 or 8 years old, saying that Obama, if he became a President would raise the price of gas !! Obviously the kid got this precious information from his parents or other kids in the school or neighborhood who in turn got it from their parents. I always keep wondering what this kid grew up to. Did he realize that Oil prices are not controlled by the President, that who ever gave him this false information is prejudiced beyond reason?
9
Newt Gingrich ran in 2012 on the platform of $2 gas, and under Obama, we are getting it. In 2008, Sarah Palin kept saying "Drill Baby Drill". And under Obama, we did.
Why are the Republicans not heaping praise on Obama for carrying out their programs?
Why are the Republicans not heaping praise on Obama for carrying out their programs?
4
Ummm... PWB?
This glut will lay off US oil workers and the XL Keystone pipeline by bringing in Canadian oil will exacerbate this problem. The pipeline will mean thousands of jobs but these will go to Canadians as the pipeline itself will only use less than 100 US workers after it's finished. So don't fall for that pipeline being good for US jobs. It will do the opposite.
13
How come we're still paying high prices at the fuel pump? Because the oil companies want it that way. Maybe we need to look at how the major oil companies set prices for petroleum products like gasoline, diesel fuel, jet fuel and heating oil. Does each company set its own prices or is there concerted action afoot? Does the government know or care? Since they enforce the federal laws and regulations, maybe the DOJ should take a look. Never hurts to ask.
5
"How come we're still paying high prices at the fuel pump?".....The price at the pump would be cheap if your car ran on crude oil, but unfortunately it has to be refined first, and refinery capacity is limited.
6
Dear Mr. Black,
If you look at the EIA (Energy Information Agency of the USA) you will find that average gasoline prices in the USA have dropped from US$ 3.30/gal in January 2014 to US$ 2.12/gal in January 2015 which follows more or less the declining price of the bbl.
The price of gasoline from state to state is a lot more about how much tax is added by a particular state and as in California where they require certain additional refining to the products sold there that increase the cost.
If you look at the EIA (Energy Information Agency of the USA) you will find that average gasoline prices in the USA have dropped from US$ 3.30/gal in January 2014 to US$ 2.12/gal in January 2015 which follows more or less the declining price of the bbl.
The price of gasoline from state to state is a lot more about how much tax is added by a particular state and as in California where they require certain additional refining to the products sold there that increase the cost.
Look for a graph spanning decades, of crude oil prices and correlate them with the general health of this economy and the world's economies.
All through the 1990's we prospered as oil ran at about 40 dollars per barrel as it does now. Then after Bush JR. won in 2000 and took office in 2001, the price of oil gradually rose to an extraordinary 147 dollars per barrel in July 2008 crippling the worlds economies.
Everything will be fine at 40 dollars or 60 dollars per barrel, but I fear price fixing by the curtailing of production. I think it's a deliberate attempt by the oil cartels to raise prices.
All through the 1990's we prospered as oil ran at about 40 dollars per barrel as it does now. Then after Bush JR. won in 2000 and took office in 2001, the price of oil gradually rose to an extraordinary 147 dollars per barrel in July 2008 crippling the worlds economies.
Everything will be fine at 40 dollars or 60 dollars per barrel, but I fear price fixing by the curtailing of production. I think it's a deliberate attempt by the oil cartels to raise prices.
7
They'll only raise prices after they've tanked the NA shale oil production badly enough that it will be costly to restart. They can tank prices again any time they wish. We need energy independence in the US, and that means less dependence on fossil fuels altogether.
Oil should be considered a strategic resource and stored in times of peace.
Build new storage facilities. Our current storage capacity gives us no more than a month or two of supply.
Be prepared.
Build new storage facilities. Our current storage capacity gives us no more than a month or two of supply.
Be prepared.
11
A drop in price that edges out marginal shale oil producers in the lower 48 states, leaving that oil in the ground, is effectively creating a reserve of oil for the U.S. The technological advances that made shale oil possible to produce are well developed and can be restarted at any time the price rises (with some spin up time, but nothing like the time required to wildcat and develop a new field offshore).
Commenters are so misinformed here it's ridiculous. Big oil is not some evil monolithic tyrant that pockets profits while happily carving the earth. The shale revolution powered a $1+ trillion build-out of pipelines, rail networks, and drilling and gathering infrastructure, and created over a million new jobs. The big economic revolution that liberals want to attribute to Obama? Thank oil for that. If anything Obama is a detriment to the industry with his willing intent to bring Iran back online so it can flood the market. But that's fine. Our good friends in the OPEC cartel are already deliberately pumping more oil to muscle out the shale industry and they will continue to do so. Let's just go back to being dependent on middle eastern oil. That has historically worked out great for us.
28
Rocco, instead of worrying about oil oil and more oil how about we wake up and realize how damaging it is? That's why the comments reflect anger with the industry - it's essentially run the world since the 19th century and now threatens to completely destroy our one and only planet.
The oil industry has done very well and now, how about that money starts being invested in alternative energy sources that won't kill us all, cause wars and catastrophic climate change?
It's long past time.
The oil industry has done very well and now, how about that money starts being invested in alternative energy sources that won't kill us all, cause wars and catastrophic climate change?
It's long past time.
1
The commenters here do the best they can, considering how little real news gets distributed and how much smoke and mirrors.
1
The oil has been there for millions of years; it will still be there ten years from now. The extractive industry apologists always present theirs as a now-or-never proposition. In reality it is now or in the future. Meanwhile, a few more oysters and sea turtles will get to finish their life cycles undisturbed.
1
A real government would block all the tar sands developments that are obviously not needed and put the squeeze on the oil companies who are hurting, extract environmental concessions and roll back the oil industry tax loopholes. Let's see if they have still have the cash to pay all those lobbyists. But we don't have a real government, Washington is still run by oil industry insiders.
21
There is a looming black cloud in these oil prices. Congress is hoping to tap the sale of oil from the US Strategic Petroleum Reserve to fund worthwhile goals, the bipartisan DRIVE Act supported by plans to sell oil to pay for new roads and bridges, assumes a price of $89 per barrel. The House passed the Cures act, a bill to fund $5.4 billion in medical research by selling 64 million barrels, assumes a price of $84 per barrel. Today oil is approaching $40 per barrel, how are we making up the difference to pay for these things when the realized price of the oil is less than half of what was estimated in revenue generated by the sale?
5
Because the government will sell the oil to themselves (military) at those prices. And yes, 'government' means us.
1
This is absolutely fascinating. We are witnessing the opposite of inelastic demand. There must be an economic term for it, but I don't know what it is.
With inelastic demand, suppliers can charge whatever they want because consumption remains constant and does not decline with increasing price.
In this situation, the suppliers have no other way of making money, so as the price of the product drops, they keep producing to maintain their income stream. They do not change their behavior and reduce production to increase the price.
The oil companies and oil states are now locked in their own self inflicted race to the bottom. As profits drop due to oversupply, they reduce investment which prevents them from developing alternative sources of income. This further locks them into a downward spiral and makes them even more dependent on the current business model. They are all driving each other out of business.
This greatly reduces the political power of fossil fuel companies. They are making something they can't get rid of. No need for Keystone or toxic Koch Canadian tar sand oil. Drill baby drill goes away. Conservation greatly impacts the price at the pump.
The old argument that regulations are putting the economy at risk also goes away. They can't sell what they have, so might as well make something that doesn't destroy the planet and that people actually want to buy.
With inelastic demand, suppliers can charge whatever they want because consumption remains constant and does not decline with increasing price.
In this situation, the suppliers have no other way of making money, so as the price of the product drops, they keep producing to maintain their income stream. They do not change their behavior and reduce production to increase the price.
The oil companies and oil states are now locked in their own self inflicted race to the bottom. As profits drop due to oversupply, they reduce investment which prevents them from developing alternative sources of income. This further locks them into a downward spiral and makes them even more dependent on the current business model. They are all driving each other out of business.
This greatly reduces the political power of fossil fuel companies. They are making something they can't get rid of. No need for Keystone or toxic Koch Canadian tar sand oil. Drill baby drill goes away. Conservation greatly impacts the price at the pump.
The old argument that regulations are putting the economy at risk also goes away. They can't sell what they have, so might as well make something that doesn't destroy the planet and that people actually want to buy.
28
My read, based on sitting out these leases, is that producers are going to collapse production as much as they can, and have their (former) employees eat it on the way out the door. Then, if they can impact the global supply enough to increase price, they'll hire people back at lower wages.
I hate paying at the pump as much as anyone, but I am concerned that this short-term glut will actually slow the development of clean energy sources. With prices dropping, there is less of a pressure for consumers to cut down on petroleum use or buy efficient or electric vehicles. With less consumer demand for efficient or electric vehicles, there is less of an economic incentive for entrepreneurs and auto-makers to invest in those directions.
It will be nice to pay less at the pump in the short term, but we may end up paying a bigger price down the road if it means a delay in transitioning to cleaner energy.
It will be nice to pay less at the pump in the short term, but we may end up paying a bigger price down the road if it means a delay in transitioning to cleaner energy.
155
So, what will happen is that some world crises will occur and then the price of oil will start rising. Especially, if another oil producing nation is involved in the crises. This has been the cycle since 1973.
Add to the above, the US stops producing oil. Then OPEC will raise the price just enough so that fracking is not profitable for oil, but enough to control the suplly and the price. Oh, I forgot, the tar sand oil extraction, in Alberta, will also cease, as it too isn't profitable. Thus, making Keystone XL moot.
Meanwhile, while these cycles will continue to come and go, the move to alternative energy keeps on stalling.
Add to the above, the US stops producing oil. Then OPEC will raise the price just enough so that fracking is not profitable for oil, but enough to control the suplly and the price. Oh, I forgot, the tar sand oil extraction, in Alberta, will also cease, as it too isn't profitable. Thus, making Keystone XL moot.
Meanwhile, while these cycles will continue to come and go, the move to alternative energy keeps on stalling.
3
People buying electric cars are not much influenced by gas prices. "Green Car Reports” ran several articles this year to demonstrate. When I bought my own, the advantages of clean transportation hugely outweightweighed the premium paid over a gas model, never to be recouped by cheaper operating costs.
1
To speed the development of clean energy, Click and Clack advised us to drive gas hogs in order to burn up all of the petroleum quickly as possible.
I predict that this won't stop politicians pushing for the Keystone XL pipeline. Then when they find out that it's too expensive to mine the Alberta tar sands to fill it, someone will propose adding a branch so as to drain water out of the Great Lakes and pump it south. That's how the intelligent life in Congress will respond to the changing climate.
25
Still, the price of gasoline at the pump remains unaffected by the precipitous drop in the price of crude. The regular shibboleths are being trotted out: refinery accidents, down time for reformulation to winter gas, etc.
55
Dear Leading Edge Boomer,
Actually if you look at the Energy Information Agency (US govt agency) the average price of gasoline has declined with the cost of the barrel. According to the EIA the average price of gasoline in the USA at Jan-14 was US$ 3.30/gal compared to US$ 2.12/gal in Jan-15. That is a 36% decrease in price which is comparable to the drop in price of the barrel for that same period.
Actually if you look at the Energy Information Agency (US govt agency) the average price of gasoline has declined with the cost of the barrel. According to the EIA the average price of gasoline in the USA at Jan-14 was US$ 3.30/gal compared to US$ 2.12/gal in Jan-15. That is a 36% decrease in price which is comparable to the drop in price of the barrel for that same period.
1
According to the usual notions that we consumers are expected to accept price increases when the crude barrel price goes up, we get to pay much more. How is it that we continue to pay far too much as the price per gallon for crude goes down?
Greedy so and so's and no one to regulate the greedy so and so's. Alas, what a wonderful nation we live in that continues to soak all of the people so that some may prosper.
Greedy so and so's and no one to regulate the greedy so and so's. Alas, what a wonderful nation we live in that continues to soak all of the people so that some may prosper.
14
Please tell us again why the Keystone XL pipeline is so important.
287
because transporting oil via rail and truck is much more expensive, and more dangerous to the environment, than transporting it via pipeline.
3
So the Canadians can sell oil to the Chinese. Next question?
4
Because it will give 35 people jobs. Those 35 people are key. We don't know who they are or would be, but believe me thy are really, really important.
5
It will be a long time before petroleum use is significantly reduced. However, the major oil companies like Exxon Mobil, Chevron etc will have to start considering themselves Energy Companies not Petroleum Companies and embrace alternative energy sources. I expect XOM to eventually take over Vestas and maybe SunEdison. Some move in that direction would please stockholders, I suspect.
20
The Saudis are the winner here. The marginal players have been run out of town by the oil glut partly produced by the Saudis pumping more oil than required by the market. They wanted to drive down the price to get rid of players that will have a hard time getting back in to the game.
44
Absolutely. Instead of the invisible hand guiding the market, it's the Saudis giving the market the invisible finger.
A few months ago I noticed that a whole group of politicians quit mentioning the word keystone every day. Now it's been quite a while since I've heard a peep out of them.
I really glad that mess didn't happen.
I really glad that mess didn't happen.
66
Wonderful! So it makes perfect sense for Obama to permit Shell Oil Co. to start offshore drilling in Alaska...
42
Having a permit to drill in the Artic and actually drilling in the Artic are two rather different things.
2
i am glad you brought obama up.....i thank mr. obama for this glut and the lower prices. the thing that seems to madden people the most about him is his ability and willingness to entertain two opposing thoughts in his mind at once. so, he pushes alternatives more than any previous president except maybe jimmy carter then he makes drilling easy and so loosens the petroleum industries' hold on our pocket books and economy. make no mistake the $5 gas during the heart of the recession was a direct wealth transfer to the top. these companies and the speculators operate on narrow self-interest and obama found a way to hoist them on their own petard.
Environmentalists should step in and buy up the leases then preserve the areas. Perhaps have some fundraising method perhaps through kickstarter or indiegogo and other methods like merchandising sales (e.g. bumper stickers, t-shirts etc.)
59
Actually, that idea has been tried in the past. It is not that easy, because of the terms weiiten into the federal leases. Whether one agrees or not, leases on potential oil fields are designed to allow, and collect royalties from, production.
4
$22.7 million? That's a lot of money even if you get Hollywood celebrities involved.
That's the difference in the economic muscle of for-profit corporations and non-profit environmentalist groups.
That's the difference in the economic muscle of for-profit corporations and non-profit environmentalist groups.
1
That's a great idea! I am a college student and I would be willing to put a few bucks (of the 15,000 of debt I already have) into this idea. Also I could see how this could sound like satire but I am being 100% honest, great idea
2
Good, maybe they'll be broke enough to stop lobbying against renewable energy.
156
So much for the concept of a "free" market. The marketplace decides nothing. Greed drives everything these days. Fuel, which we need to run the whole nation, should not be a commodity which a handful of avaricious people manipulate for their own ends. This price fixing must be investigated - if there is any room on the schedule after once more repealing the ACA and a new set of hearings into Benghazi.
We need change and we need it now.
https://emcphd.wordpress.com
We need change and we need it now.
https://emcphd.wordpress.com
83
Yes - let us look to the USSR to learn about the great successes of a centrally planned economy.
2
We don't need petroleum engineers-we need chemists and nuclear engineers . We will need infusions of federal money-or Soros, Buffett, Bill Gates and rest of the techno mob of bored billionaires wasting cash on trips to Mars and LEO flights in ancient reaction powered rockets instead of building sky-hooks. Alone these guys might kick start a new economic model . Because we need to switch off Hydrocarbon fuels, and their 'cracked' relatives, and move on to electricity made from steam powered dynamos, using purified H2O from "steam reforming". Energy provided by the simple recombination of split H ions and O will provide more electro- motive power than we know what to do with. Leaky hydrogen just goes straight to the stratosphere and disappears.
Our solutions are simple and elegant as well as safe enough for the most fearful humans.
Our solutions are simple and elegant as well as safe enough for the most fearful humans.
Let's remember who allowed speculation on oil, because it is a fairly recent development: President Bill Clinton. Brilliant guy, huh?
What I always find amazing is how fast gas prices rise as the price of a barrel of oil goes up and how slow it comes down once the price drops. Here we are nearing sub $40 dollar a barrel oil and gas prices just trickle down a cent or two per week. When the prices are going up, it is not uncommon to see prices go up a nickel in one day.
184
If our government does not subsidize the electric car industry then it is doomed to fail because of low gas prices. The higher the gas prices the faster electric cars become a viable alternative.
Well it sure it a lucky thing that Obama gave Shell Oil the go ahead to drill for oil in the arctic because there obviously isn't nearly enough oil in storage and on the market. We must have more oil, it is absolutely essential no matter how low the price goes.
And if Shell destroys countless seals, whales, birds and fish get the oil we so desperately, desperately need then so be it. Seals, whales and all the rest of this things are completely useless, anyway. We killed plenty of Iraqis to get more oil, so why should a bunch of useless animals stand in our way?
And if Shell destroys countless seals, whales, birds and fish get the oil we so desperately, desperately need then so be it. Seals, whales and all the rest of this things are completely useless, anyway. We killed plenty of Iraqis to get more oil, so why should a bunch of useless animals stand in our way?
236
The government was ordered to obey the contract signed by another administration (guess who) by the courts.
2
We could always burn them for fuel. It's hard to fit a whale into the gas tank of my car, though.
I reply in the positive with tongue firmly planted in cheek. What good are such animals that do not burn or cannot be flensed for sperm oil? Pfui!
1
It is absolutely baffling that despite an obvious surplus, falling oil prices, and continuous rises in demand of alternative renewable energy sources; that Shell has and continues to be so adamant and steadfast in their exploration for oil in the Arctic.
The fact that Shell is not even considering purchasing additional leases in the Gulf is a tell-tale sign that they are completely reliant on and expecting to turn the arctic into their next black-gold mine. They won't be able to begin actual production there for at least a decade, when we should be well on our way to curtailing fossil fuel consumption by then.... not planning to begin the biggest exploration we have seen to date!
Pure insanity. The worst part is there is such a large portion of our country who refuses to even believe the science. Albeit the same people also feel the earth is 6,000 years old as well, so go figure.
The fact that Shell is not even considering purchasing additional leases in the Gulf is a tell-tale sign that they are completely reliant on and expecting to turn the arctic into their next black-gold mine. They won't be able to begin actual production there for at least a decade, when we should be well on our way to curtailing fossil fuel consumption by then.... not planning to begin the biggest exploration we have seen to date!
Pure insanity. The worst part is there is such a large portion of our country who refuses to even believe the science. Albeit the same people also feel the earth is 6,000 years old as well, so go figure.
216
We may need a an energy dictatorship. Certainly democratic modes of government have failed miserably and have made a bad situation so rotten that our kids are already cursing us and the Boomer generation as "The Adults Who Screwed Their Kids". We can only look forward to the justified arrest by our children and our being sentenced to turn over our Social Security to generations which are more deserving of what has become a prize in our perpetual political wars---Bernie not withstanding. I do wish his socialist self the best of luck. If Teddy Roosevelt weren't dead I'd vote for him.
1
Well said, Kevin. I'm stunned that Obama went along with Shell on this. If you think about it, automakers are under an agreed-upon mandate to make cars and trucks dramatically more fuel efficient, too, thereby decreasing the need for oil.
I don't understand.
I don't understand.
3
And the US administration just rolls over.
As it should be. Keep sitting and leave the stuff in the earth.
105
Says a guy who needs everything but water and air trucked to him?
Cheap energy now means short term gains for the public.
Until the demand goes past the supply, and prices shoot bck to 80+ because no one can drill in the Arctic.
Cheap energy now means short term gains for the public.
Until the demand goes past the supply, and prices shoot bck to 80+ because no one can drill in the Arctic.
1
So, this is Econ 101. The huge oversupply of oil associated in large part to fracking in the US, and the lower demand from lower global growth implies a huge downward pressure on the oil price. We should, of course, expect a reduction in supply that should come from the marginal high-cost producers (i.e. fracking in Texas, not shallow waters in the Arabian peninsula). Why is the fact that some producers will have to stop producing so dramatic? They benefited from high oil prices for many years, and thus hugely contributed to the current rut in the oil price. The market will adjust, but meanwhile consumers all over the world benefit from lower prices of energy.
27
No, the "market" will not adjust. Producers will charge whatever they want, since users are addicted to their cars and will pay anything to support the addiction. Anyone who expects prices at the pump to decline is a brainwashed believer in the Chicago School.
3
Dear Reality,
Actually the price at the pump according the Energy Information Agency of the US government has gone down.
You can find their price graph on their website.
Average cost of gasoline in the USA, Jan-14 price US$ 3.30/gal vs Jan-15 US$ 2.12/gal.
Actually the price at the pump according the Energy Information Agency of the US government has gone down.
You can find their price graph on their website.
Average cost of gasoline in the USA, Jan-14 price US$ 3.30/gal vs Jan-15 US$ 2.12/gal.
1
I am praying that this industry is retired...the sooner the better. Our children's future, and indeed the future of all life on Earth depends on it.
Read Friedman today if you have any doubt.
Read Friedman today if you have any doubt.
71
Freidman was indeed on target today.
This did not seem to stop the speculators from driving the oil price up during the worse of the Great Recession. The greed seen then was like throwing dirt on a grave for million of struggling people. Why the high prices then? China.
Now, almost eight years later, the chickens have come home to roost. Oil is now at its lowest prices in years. Fracking going out of style created a world wide glut of oil. But, what still hurts consumers are ancient refineries which go off line and cause high gasoline prices. For example, we see an article like this, but air travel continues to rise. But the real nastiness, expected $4 a gallon gasoline in the midwest, because a refinery went off line. Why? All this money from oil went into pockets and no investment in the infrastructure.
Meanwhile, as fracking starts hitting urban areas, they want to extract more and more. In Colorado, the oil industry lobby is so powerful that they made it so that voters cannot ban fracking in ho0me rule cities. More greed.
So, now it begins. The new energy bust. Thousands will be laid off. China falling further into a recession. And it is only a matter of time before we do to. Then, the greed machine will start up again to push oil to artificial highs to make it painful. Thus, giving the have more and the have nots less.
Isn't it great living in the "greatest country in the world"?
Now, almost eight years later, the chickens have come home to roost. Oil is now at its lowest prices in years. Fracking going out of style created a world wide glut of oil. But, what still hurts consumers are ancient refineries which go off line and cause high gasoline prices. For example, we see an article like this, but air travel continues to rise. But the real nastiness, expected $4 a gallon gasoline in the midwest, because a refinery went off line. Why? All this money from oil went into pockets and no investment in the infrastructure.
Meanwhile, as fracking starts hitting urban areas, they want to extract more and more. In Colorado, the oil industry lobby is so powerful that they made it so that voters cannot ban fracking in ho0me rule cities. More greed.
So, now it begins. The new energy bust. Thousands will be laid off. China falling further into a recession. And it is only a matter of time before we do to. Then, the greed machine will start up again to push oil to artificial highs to make it painful. Thus, giving the have more and the have nots less.
Isn't it great living in the "greatest country in the world"?
90
The reason there hasn't been a new refinery built in the US since the early 1970s is the environmental red tape that would need to be negotiated, not pocketing money. Indeed, the only reason that there have been increases in refining capacity in the US is massive investment in updating existing refineries to more efficiently process crude. Sorry to bring facts into your dogma.
4
Funny, isn't investment in infrastructure is what oil companies should be doing? Instead the pocket the money and purposely keep refinery capacity at 1970s levels. It is easy to blame the environmentalists, but no one sees oil companies running to deal with the issue.
6
And why did Bush JR propose building new refineries on military bases?
1
Currently, our fossil-fueled energy path has us on a roller-coaster ride and we are plunging, white knuckled. Production in the US from the exploitation of shale oil, which accounts for 45% of our nation's oil production, will take a hit if prices continue to remain well below the $100 mark. Tens of thousands of jobs have already been cut and some debt-laden companies may go belly up.
This is the narrative that has been seizing headlines, but it’s not the whole story of what’s going on in our energy economy. While shales were booming and then busting, solar and wind have been surging. Renewables have been relegated to the sidelines of our energy priorities, a small blip in our electric generating capacity each year, but that is changing. How fast it happens could be enough to rock the boat in a major way.
The fact that we should be moving to more renewable energy and using less oil is no secret. Scientists have repeatedly warned that if we continue to burn fossil fuels with our current abandon, we risk catastrophic climate impacts, some of which we are already beginning to see. Instead, they caution, much of our oil, gas and coal reserves should stay in the ground.