GunnyGene
Hawkeye
Looking likely by early 2015. Especially in the following states: It's already below $2.50 here.
Gas under $2/gal ?
- Thread starter GunnyGene
- Start date
RugerHound
Hunter
Low oil prices are a double edged sword... On the consumer level, lower energy costs are good for increased disposable income. On the commercial side, low oil prices shut in many older wells that are in 2nd or 3rd stage recovery, putting people out of work and impacting local economies negatively.
If you noticed, OPEC is NOT cutting production. This is a significant bellwether. OPEC and Russia can maintain production and drive oil to levels low enough to hurt the US economic picture. As I stated above, when world prices plummet, American domestic oil production will necessarily drop as the cost of extraction exceed the market value of the product. America's fragile economy is where it is largely because of oil production. When production starts dropping off (along with jobs and tax revenue), you're going to see the American economy begin wobbling. World oil producers know very well that they can outlast the USA in terms of oil prices. And as such they will do so.
It will take a quarter or two, but the damage to the US economy is likely to make itself known in mid 2015 as US production slows.
In my (seldom) humble opinion of course!
If you noticed, OPEC is NOT cutting production. This is a significant bellwether. OPEC and Russia can maintain production and drive oil to levels low enough to hurt the US economic picture. As I stated above, when world prices plummet, American domestic oil production will necessarily drop as the cost of extraction exceed the market value of the product. America's fragile economy is where it is largely because of oil production. When production starts dropping off (along with jobs and tax revenue), you're going to see the American economy begin wobbling. World oil producers know very well that they can outlast the USA in terms of oil prices. And as such they will do so.
It will take a quarter or two, but the damage to the US economy is likely to make itself known in mid 2015 as US production slows.
In my (seldom) humble opinion of course!
So...Diesel in my area is 75-cents to a dollar a gallon more than regular right now. When are the lower oil prices gonna affect the price of diesel?
75-cents or more per gallon now makes a gasoline-rig cheaper to drive than a diesel rig.
WAYNO.
75-cents or more per gallon now makes a gasoline-rig cheaper to drive than a diesel rig.
WAYNO.
Cooperhawk
Buckeye
This isn't the first time this has happened. In years past when the price of oil got too high and American production began increasing OPEC has flooded the market driving the price below our production costs. I'm surprised they've waited this long.
On the up side their revenues are falling as well. Not sure how long they can keep the price low before they get in trouble with their own folks. Remember most of those countries are welfare states paid for by our demand for oil.
On the up side their revenues are falling as well. Not sure how long they can keep the price low before they get in trouble with their own folks. Remember most of those countries are welfare states paid for by our demand for oil.
RugerHound said:
And I don't have a doubt in my mind they were encouraged to do this by the current anti American bureaucracy. Teach America a lesson "don'tcha know". Put everyone else on a level playing field to us. That is the plan. He takes credit for the increase in oil production but discourages it at every turn.
The lowest price near me is $2.42 a gallon...
Lowest price in your area?
Go to...
http://www.gasbuddy.com/gb_gastemperaturemap.aspx
Lowest price in your area?
Go to...
http://www.gasbuddy.com/gb_gastemperaturemap.aspx
Pat-inCO
Hawkeye
Around here we are already hearing liberals whining about the "loss" in tax
revenue.
HELLOooo?!
Any liberal NOT understand that the monies not spent on gas WILL be spent
on other goods and services? It will NOT suddenly create an excess(?) in the
savings accounts of everyone using gas.
Does that mean/imply that the "road taxes" will be less? (Delete your favorite
expletive from here) NO! In fact, I'll just bet they will increase slightly. Why
increase? Think about the number of times you would go out for a Sunday
(or any other day) drive, just to get out of the house. How many of those
have you taken in the last eight or ten years? Anyone not admit to fewer?
The average American (if such a thing exists) has a zero sum game when
it comes to expendable income. That, in simplest terms, means what they
do not spend in one place, WILL be spent in another. Our economy will NOT
suddenly go all to (delete another expletive from here). Instead, we will
be able to better enjoy where we spend our money. :roll:
revenue.
HELLOooo?!
Any liberal NOT understand that the monies not spent on gas WILL be spent
on other goods and services? It will NOT suddenly create an excess(?) in the
savings accounts of everyone using gas.
Does that mean/imply that the "road taxes" will be less? (Delete your favorite
expletive from here) NO! In fact, I'll just bet they will increase slightly. Why
increase? Think about the number of times you would go out for a Sunday
(or any other day) drive, just to get out of the house. How many of those
have you taken in the last eight or ten years? Anyone not admit to fewer?
The average American (if such a thing exists) has a zero sum game when
it comes to expendable income. That, in simplest terms, means what they
do not spend in one place, WILL be spent in another. Our economy will NOT
suddenly go all to (delete another expletive from here). Instead, we will
be able to better enjoy where we spend our money. :roll:
WAYNO said:
BINGO we have a winner.
Even though the price of diesel has stayed about the same. So if the price of oil has gone down why not diesel? Because the oil companies still want to make money. This is also true with the other products made from oil. I just bought a Gal. of MEK at the auto paint store for $20.
it has gone up not down. Same with other chemicals. Remember this Country runs on DIESEL. Everything you buy depends on diesel.
Lowing the price of gas gets the most attention. Lower the price of food and other products. Who Cares?
I/m very aware of the diesel prices also. In July-Oct the spread was about even in a few places or 10-20 cents. Not now
mohavesam
Hawkeye
We paid $1.68 when GW Bush was President. Three months after the HWP was elected we paid $2.55
Wake me up when we get back to "Texas Republican President" retail prices. The motorhome awaits...
Wake me up when we get back to "Texas Republican President" retail prices. The motorhome awaits...
Rick Courtright
Hawkeye
Pat-inCO said:
Hi,
Listening to a couple of radio programs yesterday certainly caused a chuckle or two: talk was that holidary spending so far this year is up maybe 4.5%, as opposed to the average growth rate over the last several years of 2.9% . It was suspected lower gas prices had a positive effect. Ya think? :roll:
Now I'm not a big holiday shopper, but lower gas prices allow me to buy more quantity on my "regular" gas budget, so the naysayers who claim falling revenues will be wrong in my case! Most of our gas taxes are collected "per gallon", so we buy more gallons, we pay more taxes. Sales taxes go down, but I'm doubting there will be any loss overall, as the malls charge sales tax on that money folks wouldn't otherwise be spending...
Someone needs to tell these folks how for so many Americans, extra cash just burns holes in their pockets, so any "found money" WILL get spent!
Rick C
Come on people, it's not that hard to figure out. OPEC is planning economic warfare using oil prices as their weapon and the government should have seen this coming and had a plan in place; Department of Energy, perhaps? If the goal is truly to become independent of foreign oil, we need the price of oil in the US to stay sufficiently high such that our refineries, gas stations, etc. can make a few bucks. If the price drops to the point that US production is no longer profitable, we are drawn back into the same situation as before. This is no different than US outsourcing manufacturing to countries where costs are lower; look where that go us. I gladly pay a little more for "made in the USA" to keep jobs in our country and I would certainly do it to keep our oil industry alive, too. It is time the government wake up, do something to keep the oil prices at a profitable level, and tell OPEC to take a hike.
Pat-inCO
Hawkeye
Let's see, using that "logic"(?) the US was a waste-land back in the 90's427mach1 said:
when gas was below $1/gallon. Was it? Clearly not.
The artificially inflated prices have NOT been the driving force that has
developed oil production in the US. Technology has advanced, and so will
our nation . . . . with LOWER gas prices.
You may not be old enough to remember fifty-cent/gallon gas, but I do.
HOW did our nation survive? Many states pay fifty cents/gal just in taxes,
and where has that gotten us? In a real mess, because contractors working
on the roads, etc. think they can waste the money.
- - - - All we have to do is pay for COMPLETED work, rather than cost plus.
Is there any amongst you that has not seen road workers with ONE person
working and five or six standing and watching? I called the city one day
when a six man crew did 100 feet of "patching" in two hours. I asked why
so many were standing and watching, rather than working. Funniest thing,
they completed a quarter mile of "repairs" in the next hour. The only change
was for the tax payers getting what they were paying for.
Let's get back to receiving value . . . for our dollars.
Pat-inCO said:
I think you missed my point and I don't see how you concluded that I think the 90's were a wasteland. However, the US oil production industry is much stronger now than it has been for a LONG time. I agree that technology has allowed us to produce more oil, but that technology isn't cheap. If the price of oil were still low, it would not have been profitable to develop these technologies. If the global oil prices drop, as the OPEC members would like to see, it will become cheaper for the oil companies to buy foreign oil, which will put a lot of Americans out of work. I would rather keep the jobs in the US. BTW, I remember gas at 32 cents a gallon, before the first oil crisis. As far as taxes and road crew productivity, that is another subject all together.
Lone Wolf McQuade
Single-Sixer
Lowest price I saw today in Buzzards Bay, Massachusetts was $2.83.
RSIno1
Hunter
Was also $2.83 when I filled up here in SoCal. I figure with lower crude prices the middle east will have less dollars to fund terrorism.Lone Wolf McQuade said:
Tweety Bird
Single-Sixer
I'm so confused.
Do high energy prices destroy our economy because they eat up so much disposable income?
Or do low energy prices destroy our economy because they discourage domestic production?
On the tax angle: I don't know about your locale but here in Donut Center, the taxes are a fixed amount per gallon. Prices can go up or down but the tax per gallon doesn't change. So it seems to me that if the overall price of a gallon is less, people will buy more gallons, resulting in a tax revenue boost. Is my thinking flawed here?
And if people have to spend less of their income on energy, won't they have more money for other things, like food, refrigerators, automobiles, investments or savings accounts?
Gawd, I get so tired of the doomsday talk.
ENERGY PRICES UP! IT'S THE END OF THE WORLD. IT'S BUSH'S FAULT.
ENERGY PRICES IN THE TANK! IT'S THE END OF THE WORLD. IT'S OBAMA'S FAULT.
Do high energy prices destroy our economy because they eat up so much disposable income?
Or do low energy prices destroy our economy because they discourage domestic production?
On the tax angle: I don't know about your locale but here in Donut Center, the taxes are a fixed amount per gallon. Prices can go up or down but the tax per gallon doesn't change. So it seems to me that if the overall price of a gallon is less, people will buy more gallons, resulting in a tax revenue boost. Is my thinking flawed here?
And if people have to spend less of their income on energy, won't they have more money for other things, like food, refrigerators, automobiles, investments or savings accounts?
Gawd, I get so tired of the doomsday talk.
ENERGY PRICES UP! IT'S THE END OF THE WORLD. IT'S BUSH'S FAULT.
ENERGY PRICES IN THE TANK! IT'S THE END OF THE WORLD. IT'S OBAMA'S FAULT.
Colonialgirl
Hawkeye
Pat-inCO said:
There was a study done in Los Angeles, CA by a City Councilman who spent a day observing a city work crew of SIX men. They started 1/2 hour late (picked up the truck and drove around picking up the others on the crew.) Then Stopped for Coffee. At the first work site, ONE man gout out with a shovel to dig a hole, the others went for coffee; During his day of observation, the MOST that was ever WORKING at one time was THREE and that was 1/2 hour. Their "lunch" was over an hour and a Half long, same thing the rest of the day with a couple of "coffee breaks" AT four PM they started dropping people off to get their autos and the truck was parked in the City lot by 4:30 PM and everybody was gone by then. The WORK DAY was suppose to be 8:00 AM to 5:00 PM with an hour for lunch. He calculated that they did NOTHING for 80% of their time.
RugerHound
Hunter
Tweety Bird said:
Economics is not a finite science. In many cases things DO seem contradictory at 1st glance, but the devil is always in the details. I'm not an economist, but let me provide for you the reasoning behind my opinion that the economy isn't going to react well to VERY low crude prices: (The definition of 'very low' being prices sufficiently low enough to force US oil producers to shut in wells and lay people off)
Lower energy prices (in general) are good for a healthy economy. High energy prices are (in general) not good for any economy because the high prices claim more disposable income. Easy enough to comprehend. If the economy is healthy and stable in other areas, then higher energy prices will have a modest negative impact. However, if the economy is not healthy and is limping along largely due to the huge oil recovery business, then it's no stretch to predict a downside that has more negatives than positives when that oil recovery slows down due to oil producers shutting in wells. I'm in the oil, gas & power generation business. I have seen this done over & over throughout my career.
In our current situation (as I see it), the economy is NOT healthy by any definition. Oil extraction & production have a lot of 'trickle down' economic benefits. Workers rent housing or stay in hotels. Restaurants, laundry, bars, and a plethora of other businesses will flourish in areas where oil production is happening. Equipment used for oil recovery rattles and hums along, breaks and wears out which presents a demand for goods & services associated with that aspect of the business. The 'trickle down' goes on & on...
Strong economic states where the oil & gas recovery is taking place WILL suffer with low oil prices if these jobs start going away due to the reduced production requirements. It's just a fact of the business. As a producer, you reach a point where the market value of the oil is lower than your costs to extract it. When that happens, you've got no choice but what to shut in wells and lay workers off. That's not good. And we must remember that gasoline isn't the only 'customer' for oil. Manufacturing uses oil products in great quantities. But if employment is down and there are less people to buy products, then the benefits of low oil prices in those markets are also tempered by the reduction of consumers.
Now then... Oil is important, but it's not the only energy game in town. Guess what else is going on? The Obama administration is expanding the authority of the EPA, and they're going to start pulling the emission ceiling down which will put MORE energy producers out of business. There are literally thousands of new regulations going into effect in 2015, and a significant percentage of those impact the energy business either directly or indirectly. We know the administration is after coal, which is a cheap source of energy for electricity producers. There are no new nuclear plants being built that I know of, so it's pretty clear that the price of electricity is going to go up. That's bad because it starts to eat up the disposable income that was made available by the low gasoline prices. Besides which - Obama is on the record stating that his energy policy would 'necessarily cause energy prices to skyrocket'. A campaign promise or reality? I bet on reality.
So the 64000 dollar question is: Will the benefits of the lower oil prices be enough to outweigh the expected loss of jobs, and the rise in electricity prices (and other energy costs that increase due to the EPA regulations) ?
My crystal ball says the economy will not be happy with the loss in oil production, since that production & all its by-products are a significant part of what drives this economy right now. It's a delicate balance in a feeble economy.
As to your question about consumers buying more gasoline - Yes, tax revenues will increase as the quantity of gasoline purchased goes up if the taxes are static. (e.g. Not tied to the retail price of the fuel) Good for gubmint, but those increases in tax revenues do not necessarily translate into a healthy economy. The Federal Government has grossed more tax revenue this year than they ever have, but it hasn't made the US economy all happy & joyous has it? Sure, there are trickle down effects that are positive. If people are hired, that's a plus. If government buys goods & services from the free market, then it's also a plus. But if the additional revenue is already spent on paying down debt or back room 'black hole' projects, then there is no measurable benefit to the economy. So your question would require more info about your particular local economy to answer accurately.
Again - all in my opinion of course!
Tweety Bird
Single-Sixer
RH, thanks for that. I witnessed a similar thing in the 1980s here in CO when the oil shale projects collapsed.
But I'm still not convinced that something that negatively affects domestic oil production rates will offset the good that comes in other ways due to the lower energy prices. Maybe being in the industry gives you a different perspective.
Yes, I know it's more than gasoline but that's what people see again and again when they fill up. High energy costs affect everything. Lean ground beef is nearly $6 per pound here. Ranchers around here are paying record high prices for hay. Transportation costs are higher than ever. My industry (airlines) is famous for layoffs when expenses - of which fuel is the biggest - get high. So as energy prices come down, will the loss of jobs in oil production be offset by the LACK of job losses in the airline and other oil price sensitive businesses? I have no idea, I'm not that smart.
Don't think for a moment that I think dependency on foreign oil is a good thing. I understand the basics of supply and demand and am an unabashed supporter of free markets. In fact, I believe that fracking and the current strength of the US oil industry is what is causing the world-wide plummet of prices, proving that the market system works.
But I'm still not convinced that something that negatively affects domestic oil production rates will offset the good that comes in other ways due to the lower energy prices. Maybe being in the industry gives you a different perspective.
Yes, I know it's more than gasoline but that's what people see again and again when they fill up. High energy costs affect everything. Lean ground beef is nearly $6 per pound here. Ranchers around here are paying record high prices for hay. Transportation costs are higher than ever. My industry (airlines) is famous for layoffs when expenses - of which fuel is the biggest - get high. So as energy prices come down, will the loss of jobs in oil production be offset by the LACK of job losses in the airline and other oil price sensitive businesses? I have no idea, I'm not that smart.
Don't think for a moment that I think dependency on foreign oil is a good thing. I understand the basics of supply and demand and am an unabashed supporter of free markets. In fact, I believe that fracking and the current strength of the US oil industry is what is causing the world-wide plummet of prices, proving that the market system works.
