Gasoline prices have dropped below $3 a gallon at most U.S. gas stations, delivering a welcome lift to American consumers and retailers heading into the holidays. But the related oil-price drop has a thorny underside: It is threatening to slow the nation’s energy boom and hit the broader economy.
The U.S. economy is still set to gain more than it loses from cheaper oil, at least at current prices. Lower prices at the pump give drivers more money to spend on discretionary items like restaurant meals and vacations, and they reduce costs for many businesses.
But the latest drop is spurring debate among economists over how much falling prices will squeeze domestic producers, a reflection of the far-reaching implications from the nation’s energy resurgence.
High oil prices in recent years drove the energy boom by making costly drilling techniques like hydraulic fracturing economically feasible. Now, oil-rich states could see job growth slow. Producers would see profits tumble. And investors are already retrenching from one of the hottest sectors of the expansion.
“It creates winners and losers,” said David Rosenberg, chief economist at money-management firm Gluskin Sheff & Associates. “But with or without a shale-gas revolution, the U.S. economy comes out a winner.”
This article appears to be mostly directed at the favorable "consumer pocketbook issues". Passenger rail interests on one hand will cheer that the Empire Builder will again run on time, but on the other there will be the "hey, gas is only 3 bucks, let's just drive".
Beyond such, any thoughts to share?
Posts: 9975 | From: Clarendon Hills, IL USA (BNSF Chicago Sub MP 18.71) | Registered: Apr 2002
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How long will $3/gallon gas last? Until the Bakken and Alberta fracking operations close down? Then we might be seeing $5/gallon gas. The price of gasoline is determined more by global politics than by the cost of production and delivery. And I'm quite sure the OTP of the Empire Builder doesn't even register with the powers that determine the price of a barrel of crude oil.
Posts: 831 | From: Seattle | Registered: Jan 2011
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The perpetual losers in this fracking boom are humans and everything else in the ecosystem. Fracking poisons the aquifers it passes through. It also uses up enormous amounts of drinkable water. (Here in the western US, that is a huge problem, as are the earthquakes frakcing causes.)
What use will cheap gas be if there is no drinkable water left?
I also think these low crude oil prices cannot last. I agree that a large part of crude prices are set by political forces, but I think the actual cost of extracting that crude oil is much more costly than it used to be. Deep-water drilling is much more expensive than drilling a short way into the ground. No corporation would ever spend more money than it needed to in order to get at the raw materials it needs for its core business. Oil companies are no exception.
N. B.: Even the Saudis are now drilling offshore. They would not do that if there were a much cheaper way to get at any crude reserves in their country. This tells me that it does seem that all of the low-hanging fruit has already been plucked off the branches.
I also wonder what the real cost of crude would be if oil companies had to factor in all of the costs of repairing the damage they do to our ecosystems -- or of simply not damaging the ecosystems in the first place, and finding another way to provide us with the energy we need.
Posts: 211 | From: California | Registered: Dec 2004
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Please disregard MargaretSPfan. She does not know what she is stating. Fracking happens 2 miles (over 10,000 feet) below the surface. Water is 100 to 400 feet below surface and most places have converted to surface water.
There is little to no damage to the ecosystems in South Texas.
Also, we are sitting on over 2 trillion barrels of oil in the USA, enough to last us for 200-300 years.
If the oil companies can make over $60 a barrel, they are making money, and so are all the mineral rights holders. If you had oil under your land, you can get 22% to 25% royalties for the oil pumped out of your land. There are land owners (former farmers and ranchers) that are now making around $15,000 A DAY! in South Texas, thanks to fracking. Every business owner is getting fat in South Texas, because everyone is spending money like there is no tomorrow. Our State is flush with tax dollars, the counties and cities are flush with sales tax dollars and EVERYONE is happy!
Posts: 1418 | From: Houston, Republic of Texas | Registered: Jan 2001
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South Texas unemployment is very low, and that used to be one of the poorer areas of Texas.
And remember, when Bush left office, gasoline was at $1.89 a gallon.
Posts: 1418 | From: Houston, Republic of Texas | Registered: Jan 2001
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I can't help thinking we need to be much less dependent of foreign oil by using the oil resources in this country.
I think fracking, ANWR, and offshore drilling would cause the price of gasoline to come down (and create a lot of jobs). I also think it could be done with minimal harm to the environment. But the question is what about the price at the pump?
"In some cases, drivers won’t benefit from the decline in wholesale gas prices because consumer prices will be flat or even higher thanks to rising gas taxes imposed at the state level".
When I was in college, we had gas station wars where gasoline was 25 cents/gallon.
Richard
Posts: 1909 | From: Santa Rosa | Registered: Jan 2004
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Not sure about the 10,000 feet, Mike. Talking with a drilling rig doing a horizontal well in western KS, they were going down 3000' then across the one mile wide property. In any event, they were well below the Ogallala Aquifer before any fracking was done. the Aquifier is critical for farming in the high plains and the farmers would not be happy if fracking affected this. Fracking is not a new thing, it's been done safely since the late 40's without the catastrophe now being predicted.
I believe a far greater risk is the uncontrolled development in areas of the southwest that can't begin to support the demand for water. Las Vegas, Phoenix and southern California cities can't sustain the growing water demand.
Posts: 2397 | From: Camden, SC | Registered: Mar 2006
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I was referring to the Eagle Ford shale oil in south Texas. That is about 2 miles deep and they have found indications of 4 times that amount of oil at the 3 mile deep level. South Texas is going to be very healthy for the foreseeable future!
And just yesterday, I paid $2.52 a gallon at Sam's Club.
Posts: 1418 | From: Houston, Republic of Texas | Registered: Jan 2001
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As an FYI, that $15,000 a day figure is NOT a net figure. The federal government gets $5,850 of that $15,000, according to our current tax rates.
Posts: 1418 | From: Houston, Republic of Texas | Registered: Jan 2001
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Drove by Citgo this morning; $3.019; of course, that's Bud Lite and my ride only drinks Chivas ($3.499).
Posts: 9975 | From: Clarendon Hills, IL USA (BNSF Chicago Sub MP 18.71) | Registered: Apr 2002
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Filled up yesterday, normally $50-60 for a full tank. The pump clicked off at $40something. I was confused - it can't be full yet. Yet it was. Happy days.
-------------------- Geoff M. Posts: 2426 | From: Apple Valley, CA | Registered: Sep 2000
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Margaret -- as a retired geologist, let me assure you that Mike S is correct -- hydrofracking does NOT "poison the aquifers," since it is done well below the potable drinking water aquifer, and is normally separated from the potable aquifer by thousands of feet of low-permeability rocks.
I thought we were going to have fracking on our ballot this fall (there was a petition for it last year), but we didn't. Apparently not that many people in these parts are overly concerned about it, and Michigan is definitely an oil-producing state.
Posts: 2428 | From: Grayling, MI | Registered: Mar 2002
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Looks like Mike is buying gas from a chipmunk!
-------------------- David Pressley
Advocating for passenger trains since 1973!
Climbing toward 5,000 posts like the Southwest Chief ascending Raton Pass. Cautiously, not nearly as fast as in the old days, and hoping to avoid premature reroutes. Posts: 4203 | From: Western North Carolina | Registered: Feb 2004
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It's Buc-ees, and a Texas tradition. Going from Houston to San Antonio, it is a requirement that you stop at Buc-ees in Luling for food and their restrooms. Their restrooms are the cleanest most pleasant restrooms around. They clean them every 15 minutes. They have over 30 stalls for women and about that many urinals for men. Plus they have 20 pound bags of ice for $1.49.
Texas has patterned their new rest stops after Buc-ees restrooms.
Posts: 1418 | From: Houston, Republic of Texas | Registered: Jan 2001
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$2.64 for regular in central SC at Murray gas near Lowes. Best convenience store chain in our area is QT. Primarily in Georgia but making inroads into SC.
Wonder what effect cheap gas will have on Amtrak ridership?
Posts: 2397 | From: Camden, SC | Registered: Mar 2006
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Mr. Palmland has echoed the same thought I held when originating this topic.
Those here who review my material posted over at Railroad Net will note that I am of record that some "Shiek of Araby" just might be of mind to lower the price of his crude to such extent that it would no longer be economically feasible to continue to extract North American oil by means of 'fracking'. While such may hold off construction of the Keystone XL, I shudder to think of what could happen to all seven Class I's as they have geared up to handle the crude - especially BNSF.
So there are winners and losers from the current pricing action by Saudi Arabia. Winners are the "instant gratification" that UENI get from seeing the fill up that used to be $60 is now $50. Losers are of course any transportation company who finds themselves locked in by commodity future contracts to pay more for their gas than the current market price. Losers could be the US Taxpayers (once again; UENI) as the Iraqi government can put less chips on the table to pay the USA for its assistance in battling the current ISIS/L insurgency.
Regarding Mr. Nadeau's immediate comment, no matter from who you choose to buy your gas, no one is coming to the marketplace with clean hands. BP certainly needs no introduction on that point, nor does ExxonMobil (Valdez, lest we forget), who knows what goes between Royal Dutch (Shell) and "Vladimir The Great", and finally when Mr. Nadeau drives into Casey's General Store, who knows from where they buy the gas they sell? All the consumer cares is that it's two or three cents less than the major brands, and so far as my buggy is concerned, if it is not quite Chivas, it's Johnny Walker Black.
Posts: 9975 | From: Clarendon Hills, IL USA (BNSF Chicago Sub MP 18.71) | Registered: Apr 2002
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no matter from who you choose to buy your gas, no one is coming to the marketplace with clean hands.
True that. When you're buying petrol,it's best to be like the piano player in the brothel who "doesn't know what the girls upstairs are doing."
Posts: 1530 | From: Ocala, FL | Registered: Dec 2006
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Even lower than when I last posted: SoCal $3.05, compared to roundly $4 this time last year. Of course, SoCal is expensive in an effort to make us drive less - great, but what's the alternative? In the residential area I live the nearest bus stop is a mile away and gets maybe half a dozen buses a day. Few go to the Amtrak/Greyhound station in Victorville, and - of course - even fewer trains stop there (two).
-------------------- Geoff M. Posts: 2426 | From: Apple Valley, CA | Registered: Sep 2000
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$2.56 to $2.65/gal regular in the Midlothian Turnpike gas station row. Around $2.70 in less competitive areas. This does not include customer loyalty discounts at supermarket gas stations.
Posts: 510 | From: Richmond VA USA | Registered: Mar 2004
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$2.99 for regular where I live, $2.89 where I work, and probably $2.74 across the mountain in East Tennessee.
I could get used to this.
Mike Smith - I remember driving a rental car in Texas from the Austin airport to Wichita Falls about 8-10 years ago. We weren't in a hurry so we took US Highways west of the interstate just because. The thing that struck me was how clean every convienence store we stopped in (for gas, soft drinks, facilities,etc.) was.
-------------------- David Pressley
Advocating for passenger trains since 1973!
Climbing toward 5,000 posts like the Southwest Chief ascending Raton Pass. Cautiously, not nearly as fast as in the old days, and hoping to avoid premature reroutes. Posts: 4203 | From: Western North Carolina | Registered: Feb 2004
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$2.979 now at the local Citgo - Ogden and Warwick in Westmont.
But not much relief for those who require Premium - $3.589 (and NO; I'm not going to start driving around in some 40mpg of Regular "wind up toy' - those are saved for "insurance rentals" - or otherwise when someone next whacks my buggy - and their insurance company drags it out from February last until a few days ago.).
Posts: 9975 | From: Clarendon Hills, IL USA (BNSF Chicago Sub MP 18.71) | Registered: Apr 2002
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$2.599 at Citgo yesterday. The spread between Regular and Premium just hangs tight - $3.159.
So far as passenger transportation goes, airlines will 'clean up'; the planes are full with or without the decline in gas prices - really, how many "fly or drive" decisions are made?
Greyhound will have some hurt but not that much; all too many of their passengers do not have a roadworthy vehicle available. But their hurt will be offset with lower operating costs from the price of gas.
Poor Amtrak is kind of the 'biggest loser" (what else is new). Of course operating expenses will be coming down in tandem with all transportation, but Amtrak's passenger base is far more likely to have a roadworthy vehicle available, and the "gas is cheap; let's just drive" option can be more readily available than for those making their way to the "dog pound" - and with their belongings in plastic garbage bags!!
Posts: 9975 | From: Clarendon Hills, IL USA (BNSF Chicago Sub MP 18.71) | Registered: Apr 2002
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Does change ever occur without creating new, and sometimes worse, problems in its wake? And you want my opinion? These days I steer clear of stating any serious opinions on the Internet! We're now living in an age in which profit, popularity, and convenience are more valued than truth, sensibility, and, quite often, established law. But uh-oh! I just expressed an honest thought! Some people are bound to disagree! And if enough of them don't click the "Like" button I'll get a low rating, and some data-mining Big Algorithm will deactivate me for using dissenting keywords! I'd better just shut up and go with the flow!
-------------------- Everybody has to believe in something. I believe I'll take the train! Posts: 230 | From: Ithaca, New York | Registered: May 2009
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Well Mr. Somer, what IS your opinion?
Posts: 9975 | From: Clarendon Hills, IL USA (BNSF Chicago Sub MP 18.71) | Registered: Apr 2002
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Hello, Mr. Norman. Still lugging around that four-star member rating, I see! How sad for you! <sarcasm> LOL
Actually, I consider you one of the brightest and most well-informed characters around here!
But this obsession people have nowadays with rating everyone and everything, I think it has to go...
Or tempered or watered down somehow...
That's what I was thinking as I read through this thread...
Which of course has nothing to do with the subject at hand.
I think a wise vendor would offer some sort of compensation to at least their most loyal customers in the rare instance that prices drop drastically below the amount agreed upon for a prolonged period in a long-term contract. Likewise, I certainly would not hesitate to exercise my leverage and choose not to renew a multi-million dollar fuel contract with a vendor who did not offer some sort of concession or incentive as such when the time came to negotiate a new agreement.
Or is it simply carpe diem, all is fair in love and war, go for the jugular, in the highest circles of big business?
(Quite clearly, I'm still working on a relevant opinion! Let me make some calls...)
-------------------- Everybody has to believe in something. I believe I'll take the train! Posts: 230 | From: Ithaca, New York | Registered: May 2009
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I saw it at 2.35/gallon near where I live this weekend. At a regular gas station.
Posts: 510 | From: Richmond VA USA | Registered: Mar 2004
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Please forgive me if I am guilty of "tooting my horn", but it seems as if The Times Editorial Board is falling in line with a major point that I immediately predicted.
Stand by for Amtrak Monthly Performance reports to start showing a decline in ridership.
Oh, and all need not fear that I'm about to post photos of Citgo's gas pump; I wouldn't know how; and besides on Jan 15, it will be time to change "bad actors" and move over to BP for a stretch.
Posts: 9975 | From: Clarendon Hills, IL USA (BNSF Chicago Sub MP 18.71) | Registered: Apr 2002
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quote:Originally posted by Gilbert B Norman: Please forgive me if I am guilty of "tooting my horn", but it seems as if The Times Editorial Board is falling in line with a major point that I immediately predicted.
Stand by for Amtrak Monthly Performance reports to start showing a decline in ridership.
Oh, and all need not fear that I'm about to post photos of Citgo's gas pump; I wouldn't know how; and besides on Jan 15, it will be time to change "bad actors" and move over to BP for a stretch.
Hello Mr. Norman! Please check your Private Messages mailbox!
-------------------- Everybody has to believe in something. I believe I'll take the train! Posts: 230 | From: Ithaca, New York | Registered: May 2009
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Just filled up for $2.05/gallon in Richmond! No discount! Oh, what a feeling!
Posts: 510 | From: Richmond VA USA | Registered: Mar 2004
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1.899 at Costco in Houston. Filled up for under $35! Thank you South Texas and North Dakota!
Posts: 1418 | From: Houston, Republic of Texas | Registered: Jan 2001
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OK I'll add my 2 cents worth -- on my way home from Chicago on Friday, I paid $1.95/gal for gas in Big Rapids, MI.
(AMTRAK needs to extend the Pere Marquette N from Grand Rapids through Cedar Springs, Big Rapids, Cadillac, and Kalkaska -- there, I've now brought this back to an AMTRAK-related post!)
Posts: 2428 | From: Grayling, MI | Registered: Mar 2002
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I'm having doubts on my town breaking the $2/gallon floor before the state imposes a 5 cent/gallon gas tax raise on Jan.1. So near, yet so far.
Posts: 510 | From: Richmond VA USA | Registered: Mar 2004
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