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?
Posted by Vincent206 (Member # 15447) on :
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.
Posted by MargaretSPfan (Member # 3632) on :
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.
Posted by Mike Smith (Member # 447) on :
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!
Posted by Mike Smith (Member # 447) on :
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.
Posted by yukon11 (Member # 2997) on :
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
Posted by Vincent206 (Member # 15447) on :
quote: And remember, when Bush left office, gasoline was at $1.89 a gallon.
Let's also remember that in the summer of 2008 gas was over $4.00/gallon.
Any predictions on how that anti-fracking vote in Denton is going to go?
Posted by palmland (Member # 4344) on :
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.
Posted by Mike Smith (Member # 447) on :
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.
Posted by Mike Smith (Member # 447) on :
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.
Posted by Gilbert B Norman (Member # 1541) on :
Drove by Citgo this morning; $3.019; of course, that's Bud Lite and my ride only drinks Chivas ($3.499).
Posted by Geoff Mayo (Member # 153) on :
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.
Posted by Mike Smith (Member # 447) on :
I have some of this gas in my truck, right now.
Posted by RRRICH (Member # 1418) on :
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.
Posted by notelvis (Member # 3071) on :
Looks like Mike is buying gas from a chipmunk!
Posted by Mike Smith (Member # 447) on :
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.
Posted by DonNadeau (Member # 61606) on :
"Drove by Citgo this morning; $3.019; of course, that's Bud Lite and my ride only drinks Chivas ($3.499)."
Citgo, as some here may know, is a wholly-owned subsidiary of the Venezuelan national oil company wholly owned by the Venezuelan government.
Posted by palmland (Member # 4344) on :
$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?
Posted by Gilbert B Norman (Member # 1541) on :
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.
Posted by Ocala Mike (Member # 4657) on :
quote:Originally posted by Gilbert B Norman:
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."
Posted by Geoff Mayo (Member # 153) on :
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).
Posted by DonNadeau (Member # 61606) on :
I want to add a robust "True that."
Now , back to my slice of Casey's pizza.
Posted by Jerome Nicholson (Member # 3116) on :
$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.
Posted by notelvis (Member # 3071) on :
$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.
Posted by Gilbert B Norman (Member # 1541) on :
$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.).
Posted by Gilbert B Norman (Member # 1541) on :
$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!!
Posted by dns8560 (Member # 15184) on :
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!
Posted by Gilbert B Norman (Member # 1541) on :
Well Mr. Somer, what IS your opinion?
Posted by dns8560 (Member # 15184) on :
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...)
Posted by Mike Smith (Member # 447) on :
Here's another picture of the gas prices at Sam's Club, near Galveston, last week.
Posted by Jerome Nicholson (Member # 3116) on :
I saw it at 2.35/gallon near where I live this weekend. At a regular gas station.
Posted by Gilbert B Norman (Member # 1541) on :
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.
Posted by HopefulRailUser (Member # 4513) on :
I am jealous of you all. In CA we have finally reached $2.75 which we love.
Posted by dns8560 (Member # 15184) on :
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!
Posted by Jerome Nicholson (Member # 3116) on :
Just filled up for $2.05/gallon in Richmond! No discount! Oh, what a feeling!
Posted by Mike Smith (Member # 447) on :
1.899 at Costco in Houston. Filled up for under $35! Thank you South Texas and North Dakota!
Posted by DonNadeau (Member # 61606) on :
$2.29 - $2.33 various stations Altamonte Springs/Casselberry FL area two days ago.
Posted by Mike Smith (Member # 447) on :
Premium at Costco is $2.199. Regular is at $1.879
Posted by RRRICH (Member # 1418) on :
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!)
Posted by Jerome Nicholson (Member # 3116) on :
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.
Posted by Gilbert B Norman (Member # 1541) on :
$1.919 at a BP in Westmont IL yesterday.
But no mercy for those whose autos require Premium; $2.719 - that spread keeps growing. But then, if you have an auto requiring such, you are not supposed to think about "those kind of things". Sorry, but I do.
There is a full-service station in Hinsdale. Last time I was near there when Premium "out on the street" was $4.599, they were $5.199
Posted by yukon11 (Member # 2997) on :
I have been under the impression that most all cars sold in the US must be able to run on 87 octane gas, and thus the higher premium gas is unnecessary. Maybe if you have a high performance engine (BMW, Ferrari, etc) it would need high octane. But, I have heard that even if the owner's manual says to use high octane, in most cases it isn't necessary.
Richard
Posted by Jerome Nicholson (Member # 3116) on :
I dunno about that...some older cars with turbocharged engines (example previous years' VW Passat) specified premium. Come to think of it, diesel is now way more expensive than regular. I wonder if the higher gas mileage counters the higher cost of diesel? Anyway, I just filled up at Kroger with loyalty card for $1.67/gallon! Oh, what a feeling!
Posted by Mike Smith (Member # 447) on :
Speaking of diesel, back in 2006, our federal government stated the cost of diesel will rise between $.05 to $.25 per gallon when the sulfur content was reduced from 500PPM to 15PPM. They REALLY blew that "estimate"!
As an FYI, I have $1.679 gas in my truck right now.
Posted by Gilbert B Norman (Member # 1541) on :
It clearly states on the gas cap of my '13 Lexus GS, 91 octane is required. I'm not about to "test" that requirement even if I'm sure many an owner (more likely a lessee) does so.
Funny how once in Kentucky I inadvertently put about 12ga of 87 Regular in the 16ga tank. Fortunately, I was on a trip to Atlanta, and was able to burn it off on the quick. I stopped every 100 miles to get filled up with 93 Premium. I had had two such fill ups before getting to Monteagle Pass (in TN, 40 miles West of Chattanooga) so that was an "up and over" without incident.
Posted by PullmanCo (Member # 1138) on :
My Abarth says 91 preferred, 87 raw minimum.
I typically use 89.
Gas is 1.759 in KC right now.
Posted by Gilbert B Norman (Member # 1541) on :
Flying J, Benton Harbor MI this past Monday; Reg 87 $1.919; Premium 92 $2.199.
Posted by DonNadeau (Member # 61606) on :
This move toward lower prices clearly seems designed to halt further development of oil resources in Canada and the USA.
These are at risk now especially because the high capital costs needed. By capital costs, I mean not only the equipment and land for actual removal of the oil, for pipelines, and for new refineries, but also for such things as rail tank cars and increased rail capacity.
Ladies and gentlemen, enjoy these low prices now. We may never see these again until new energy protocols such as solar become truly financially viable.
Posted by Gilbert B Norman (Member # 1541) on :
It appears that it's time to retitle this topic; right way or wrong way depends upon the individual concerned (guarantee you, I'm "ahead of the game" @ $100bbl/$4.00ga):
In the latest sign that the seven-month selloff in crude-oil prices may be nearing a bottom, an energy watchdog said that a recovery seems “inevitable” and the glut that has driven down prices by more than 50% since June could start to ease as soon as the second half.
A wave of spending cuts by oil producers and a sharp decline in the number of rigs drilling for crude in the U.S. likely will slow the nation’s oil-output growth, spurring a rebound in prices, the International Energy Agency said in a report released Tuesday U.K. time. The benchmark U.S. oil price rose 2.3% to $52.86 a barrel on Monday and is up 19% from a nearly six-year low hit last month.
I think there is a lesson to be learned here; even though the USA is something close to "energy independence" with the new domestic and "friendly foreign" sources, we are still at the mercy of some Sheik of Araby deciding he doesn't like the world price of oil and "does something about it".
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