OT Low Gas Prices

Steve@Advance

Well-known Member
Saw gas for $2.39 this morning!

But wondering, is this really a good thing? No, I'm not complaining, just wondering what the end result of this will be, and what is causing it.

My theory, and I may be completely off base here, but every time I see the news ISIS has gained more ground. And on that ground are thousands of producing oil wells, there free for the taking. So they have no overhead to overcome, can cut the price and flood the market with black market oil, support their cause, gain more ground, more power...

The oil companies that buy it, refine it, sell it, have no concern for anything but the profit they will make.

We in turn buy it, at a lower price, as we have no choice. And are in turn supporting ISIS...

I realize there is nothing we can do about it. Just wondering how this will look a few years from now!
 
(quoted from post at 06:51:32 11/25/14) Saw gas for $2.39 this morning!

But wondering, is this really a good thing? No, I'm not complaining, just wondering what the end result of this will be, and what is causing it.

My theory, and I may be completely off base here, but every time I see the news ISIS has gained more ground. And on that ground are thousands of producing oil wells, there free for the taking. So they have no overhead to overcome, can cut the price and flood the market with black market oil, support their cause, gain more ground, more power...

The oil companies that buy it, refine it, sell it, have no concern for anything but the profit they will make.

We in turn buy it, at a lower price, as we have no choice. And are in turn supporting ISIS...

I realize there is nothing we can do about it. Just wondering how this will look a few years from now!

Fuel prices are coming down because we are now producing our own fuel, and are not dependent on foreign oil.

When fuel prices go down, everyone benefits.
 
I have heard that some middle east suppliers are trying to drive the price down enough to put many American drillers out of business. When that happens then they can cut back and the price of crude will be back over $100! The domestic production is good for our economy, and it has stabilized prices, but the plan was after WW2 to use middle eastern oil as long as it was available, and save ours for a rainy day. Maybe that is an outdated plan. ISIS is a real threat to world stability, and they are gaining ground, not good.
 
Move to Wooster Ohio as they just raised the price .12 cents yesterday it is now $ 2.89 area.
 
We in the US became the second largest oil producer in the world in 2014, behind the Saudi's. This put the big time hurt to the other counties producing oil for export - Mideast, Russia. All that US oil production helped bring prices down to where they are today. These gas prices put 20 to 40 bucks a week of extra money into everyone's pocket that drives a car/truck compared to a year ago gas price. Multiply that by millions of drivers and you have a miniboom in the US economy. Enjoy these prices not seen for years while its here because oil markets can be volatile, if you remember the last 5 years prices.
 
That is part of my thinking as well. Years down the road if we run out of oil and have nothing in place to replace it...where will we have to go for it? Long term strategy to break the country? I remember being told in school that we had at least 50 years of oil reserves at that present time, but if we use up or sell all we have then what?
 
I personally don't consider $2.39 to be CHEAP GAS. When the current President took office it was around $1.89 and many people blamed those "high prices" as the fault of Bush and his rich oil buddies making such huge profits. Therefore I just cant agree we now have CHEAP GAS as compared to what it was for several years prior to the current administration.

$2.39 "cheap" not in my book even though sure its less then $4.00. All how you look at it or what you compare it to. Cheap compared to $4.00 YES Cheap compared to $1.89 (or 25 cents when I was younger lol ) NO.

John T
 
Gas was under $2 a gallon just 10-12 years ago and $1 per gallon 25 years ago. I didn't see people calling those prices "low." Now it's under $3 and considered a bargain? The "new normal" I guess.
 
I'm looking at the Saudis and wondering what is up? I hadn't thought about them allowing the price to fall to drive the low profit producers out. Basic economic theory is that the higher the price is (or profit) is the more product will be generated. This would indicate that if the price spikes up say $30 operations and wells that weren't profitable may suddenly be. Kind of like when corn shot up all of a sudden land that wasn't profitable with $4.00 corn was with $6 or $7.

What I wonder is are the Saudi's looking at ISIS and perceive them as a threat? Is the dropping of prices simply some of the established Arab countries trying to make nice so we'll bail them out if ISIS comes knocking on their door (much like we did for Kuwait)? Or is it that oil rich Arab countries have funding needs and they can't afford not to produce? Are they looking at China and what a world with China as the dominate economy be like and thinking it wouldn't be good for them? Yes radical nnalert portrays us as the Great White Satan and infidels but maybe some of the more astute Arab leaders realize our policies about religion and nnalert are a lot more tolerant than China's will be.
 
To clarify a bit. The US is a net exporter of petroleum. We still import crude oil, but less than half of what we did 5-6 years ago. We export refined products. We still have a law from the 1970's forbidding the export of. Crude.
As mentioned, our production of crude, and natural gas is way up due to horizontal drilling and fracking. meanwhile, our use of gasoline is down about 5% versus 7years ago. OPEC kept crude above. $ 100. As long as they could. At 42 gal. per barrel, $100. crude is roughly $ 2.50 per gallon before any refining, transport, or taxes
 
There is no such thing as no overhead oil, if someone gave you an oilwell you would still have to maintain it and produce it and get the oil to where it can be sold. The single highest cost involved with Middle Eastern desert oil wells is getting the product to market, nobody is flooding the market with ''cheap'' oil, the increase in US production coupled with the drop in demand has resulted in lower prices, the Saudis have not cut production yet, but they may still decide to. In case some people have not noticed the world is in recession, the US may have an easier recovery simply due to oil and gas activity, without which there would have been absolutely no economic growth in zeros two terms.
 
John,

Might want to check facts on this one. Gas prices were in the upper 3s before external_link took office. They did tumble to the 1s after the recession took full force and have steadily recovered to the upper 3s again.

You have to take inflation into account, which makes it a better deal now than before external_link.
 
Steve,
Send some of cheap gas my way. Mine is still around the $2.79 range. Betting there will be a Thanksgiving bump.

Is cheap gas good? My sister says yes. She and her family have a HVAC business. When gas were high, people put off repairing furnaces and AC's.
I knew a person with a pizza business. He said there are times of the year when business is very slow, like back to school time. Parents spend a pant load on clothes, books, supplies and no money left over for eating out.

As a landlord, you don't want to have a vacant place in Nov, Dec, and Jan. People spend their money on Thanksgiving, Christmas, higher utility bills, and it's not until they get their tax refund checks do they have money to pay a deposit and rent.

I predict cheap gas will cause an up tick in sales for gas guzzling trucks and SUV's

So, for the people who live from pay check to pay check, yes cheap gas gives them more money to buy beer and cigs. Stimulates the economy.
George
 
We also export crude oil to Japan. It comes through the Alaskan pipe line into ships and sent to Japan.
 
The 1.89 was where I live, cant say for anywhere else. Still don't consider $2.39 cheap lol

Nice chattin with ya

John T
 
Check the import/export figures for countries of origin and export customers and volume. US main import is from Canada first, Mexico second and a tossup between Venuzela and Nigeria third, Saudi oil to US is mostly refueling Navy in Saudi area and they get a discount- sort of like free coffee to patrol officer on night shift to get some police cars at your parking lot in high crime area to make the criminal cautious. US exports go to Canada- Surprise. The Canadian crude imports go to US Midwest and the exports from US- lots of heating oil- go to Eastern Canada, seems the central Canada oil would have to go around great lakes for the eastern demand- but it is convenient to use existing pipelines going north/south in the 2 different areas to handle the local demands. Mexican exports to US are mostly to southern California market- just handy to use the short pipeline from Mexico instead of much longer pipeline from Texas for a fair chunk of demand for unleaded gas base. New Jersey has imports from Europe of unleaded gasoline base and the tankers head back with ultra low sulfur diesel base- the yield of product from a barrel of oil is relatively fixed, hard to change the proportion of gas a light oil, heavy oil, residual oil. If a local market has need for more unleaded gasoline base then the extra yield of light oil becomes sort of a glut- eastern US market. If your local market because of various legal and tax quirks wants more light oil fractions then you end up with surplus of unleaded gasoline base- Europe's market. A large tanker shuttling back and forth from Rotterdam to New Jersey carries the market refinery surplus to the 'short' market both ways and makes some profit and so do the local market distributors--and the volume of product imported shows up in the stats of country in different columns to give the media flacks something to write about. The knowledgeable accountants just shrug and point out volume in and out matches- ship tanks same size coming and going since it is same ship. The Rotterdam product was refined from Mideast oil- that shows up as US import from the Mideast country since the little stop in Europe doesn't count as the country of origin in the stats quoted by politician and media. Citgo stations sell the owners- Venuzuela government- product. The Socialist need the Capitalist money, the local Citgo operator votes and the account balance from oil product sales to socialist buys some US goods for the people of Socialist country- with a bit of luxury goods sometimes for the Socialist government official like the president for life- no surprise. Saudis have some cash reserve, can discount a bit with minimal local effect-- but the Iranians need $100.00 barrel price to balance their budget and meeting a less than $80.00 barrel competitor price means a choice between subsidy to a Shia group causing trouble to a Saudi 'client' or domestic programs that might cause angry locals to thump the Iranian Mullah or politician. Mid East politics affect market price in various ways. Amish with some need for hay instead of gasoline for transport can laugh at English concern about gas prices- they can have a 'horse laugh'. Teasing Alert! RN
 
James said he read an article that OPEC is dropping their prices to force smaller suppliers out of business. (like Walmart does) Once the other suppliers are forced out, then can charge what they want.
 
Before you make wild assumptions, do your research.

Do you know for a fact that ISIS is even selling oil or they too busy fighting a war?

If they could do you know of any oil companies.

You seem to be assuming the worst with out any factual information.
 
ISIS got a couple of refinery areas in Iraq couple months back on their surge, had a north Syrian one also. Rumor has it the ISIS discount price was about $35.00 a barrel and buyers resell to Turkish broker that feeds the Turkish refineries - and also buys some from Kurds for $50.00. Truck tanker hauls across border and Turks check it and let through because it goes to their agent that pays tax's ,etc to government - or a government power broker. Some other discounts, fees sometimes involved- but end product is gasoline and kerosene, diesel for mostly local markets with some going to nearby Med markets in Cyprus and Greece. Can't tell end product from oil from the Iraqi government well source- black market for oil has been around since Saddam got embargoed. Reuters and AP articles. RN.
 
As soon as I bought my new '02 Cummins Dodge, deisel climbed up to $1.34 per gallon. I wasn't happy about that at all, but would settle for it today.

Mark
 

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