Price of gas hits lowest point in nearly 5 years

Discussion in 'General Discussion' started by hacon1, Dec 21, 2008.

  1. hacon1

    hacon1 Monkey+++

    Price of gas hits lowest point in nearly 5 years

    Dec 21, 4:41 PM (ET)

    CAMARILLO, Calif. (AP) - The average national price of gasoline fell 9 cents in the past two weeks, bringing it to its lowest point in nearly five years, according to a national survey released Sunday.

    The average price of regular gasoline Friday was $1.66 a gallon, oil industry analyst Trilby Lundberg said. The price of mid-grade was $1.80 a gallon and the price of premium was $1.92 a gallon.

    The last time gas prices dipped so low was in February 2004, Lundberg said, when the national average for regular was also around $1.66 a gallon. The all-time high was on July 11, 2008, when the price peaked at $4.11 a gallon.

    Of cities surveyed, the nation's lowest price was $1.37 in Cheyenne, Wyo. The highest price was $2.41 in Anchorage, Alaska. In the continental United States, the highest price was on New York's Long Island, at $1.92.
  2. Quigley_Sharps

    Quigley_Sharps The Badministrator Administrator Founding Member

    peak oil you have to love it, I have been told for a year it was never coming down in price ever again.
    Well I it shows...we have to many people on this planet.
  3. ghrit

    ghrit Bad company Administrator Founding Member

    I'm a firm believer in peak oil. It is becoming important to stretch what's left. Hang on, Pennsylvania natural gas is fixin' to get "harvested" and help liquid petro products last a bit longer. (You Texans only think the Barnett was big.)
  4. Quigley_Sharps

    Quigley_Sharps The Badministrator Administrator Founding Member

    I know you do. Are we at the peak?
  5. ghrit

    ghrit Bad company Administrator Founding Member

    Dunno. My crystal ball is pretty cloudy.
  6. kckndrgn

    kckndrgn Monkey+++ Moderator Emeritus Founding Member

    So, if fuel is at a 5 yr low, then why are companies still charging a "fuel surcharge"? Oh, wait, so they can make more money.
  7. E.L.

    E.L. Moderator of Lead Moderator Emeritus Founding Member

    What happened to the evil oil companies? Christmas Spirit? [ROFL][ROFL][ROFL][ROFL][ROFL][ROFL][ROFL][ROFL][rofllmao][rofllmao][rofllmao][rofllmao][rofllmao][rofllmao][rofllmao]
  8. Bps1691

    Bps1691 Monkey++

    In my area gas has actually went up about 10-12 cents a gallon in the the last week, It's was at $1.799 a gallon yesterday when I got gas.

    Funny thing our area, If I drive out of this county in any direction I can usually get gas about 5-8 cents cheaper than here. Of course I live in Illinois so I am guessing the politicans in this area must of found a way to add a sur-charge of some type to pay for all of those "necessary" programs.
  9. kckndrgn

    kckndrgn Monkey+++ Moderator Emeritus Founding Member

    My FIL said he saw a 10 cent increase this week. Funny thing is all the stations I normally pass on my way to work were unchanged.
  10. monkeyman

    monkeyman Monkey+++ Moderator Emeritus Founding Member

    Im glad its down but I have to say it dose have me asking WTF? As far as I know there havent been any huge new finds so supply hasnt grown, demand hasnt gone down significantly and the US dollar is weaker and lower in value than ever. So how is it that we are getting it so much cheaper now than in the summer, when is the pendulum going to swing back and how far? I also dont think investors got scared of oil and ran from it. So it just makes me wonder what pieces of the puzzle Im not seeing.
  11. E.L.

    E.L. Moderator of Lead Moderator Emeritus Founding Member

    Actually demand has gone down, a lot. The world has been cutting back, and with the credit freeze new projects are not being financed. If a company decided not to build a new plant or add on to an existing one, all of the goods and services to build, set up and supply this plant that use oil in their products and shipping are not utilized. At first you might not think this is that big of a deal, but when you set down with people in upper management in different industries and they start to tell you about large and small projects that were eliminated due to lack of financing, and cutbacks in general that leave people without a job because products are still on the shelf then you start to see the overall impact. New product lines that were planned, cancelled. A freeze on traveling for a lot of sales and corporate executives. Employees laid off. Banks holding on to the money they were given in the bail-out, and not loaning the capital out. People are holding on to whatever money they have, they are afraid to spend it.
  12. Minuteman

    Minuteman Chaplain Moderator Founding Member

    I quoted other sources in the "Peak Oil" thread that the only way to forestall the effects of PO would be a drastic reduction in consumption. But we weren't apt to change without being forced to. Even $5 a gallon gas did little to stem the gluttonous usage. But that combined with a global financial meltdown was what it took to turn the tide. (a scenario that no one foresaw).
    I was ridiculed for trying to tell folks that it was all about supply and demand. It had to be some plot by those evil oil companies and those greedy stock traders. Well where are they now?

    This economic meltdown is beginning to effect the oil industry also. And when I say "oil company" I'm not talking about the major, international mega companies that control a whopping 6% of the worlds crude stocks.
    98% of the oil industry is made up of small independent companies and blue collar workers that make less than $80 thousand a year.

    Analysis: Flying J bankruptcy underscores industry weakness
    The financial plight of Utah-based Flying J, which filed for bankruptcy reorganization Monday, shows the kind of pressure refiners face amid tight credit, weakened profits and declining demand, according to this article. Analysts say more private oil companies that are holding huge debt may file for bankruptcy protection if the economy continues to decline and loans remain unattainable. The Wall Street Journal (subscription required)

    Jobs fed by Alberta's oil-sands industry are drying up
    Unemployment is mounting in Alberta, where the government faces its first deficit in years. As the oil-sands market fizzles in the face of falling oil prices, tight lending practices and a downturn in the economy, workers lament the loss of employment in an industry that was bringing people from all over the world. "The gold rush is over. Up until four or five months ago, there were shortages in pretty much every trade," said an unnamed recruiter in this report. The Edmonton Sun (Canada)/The Canadian Press (12/23)

    Collapse of oil price drives big spending cutbacks
    Barclays Capital projected that U.S. oil companies will be hit hard by falling oil prices, forcing them to pull back on exploration and oilfield development plans. "Budgets are being cut in response to the significant decline in commodity prices, constrained cashflow and the tight credit markets," the bank said. The Times (London) (12/22) , Oil & Gas Journal (12/20)

    Shell sails out of Beaufort Sea for now
    Shell Oil has abandoned exploration of Alaska's Beaufort Sea for 2009 in order to focus on its legal battle over its offshore plans in the area. The 9th Circuit Court of Appeals ruled that federal regulators improperly granted Beaufort Sea drilling rights; the company has spent at least $44 million in the region. Oil & Gas Journal (12/23)

    Is the U.S. Rig Count about to Enter Freefall Territory?
    <TABLE dir=ltr cellSpacing=0 cellPadding=0 width=624 border=0><TBODY><TR><TD vAlign=center bgColor=#ffffff>Barely a month ago, Wall Street analysts became concerned about a drop in the U.S. rig count due to weakening commodity prices, and in particular natural gas prices, and the impact of the credit crisis on producer access to capital. The talk initially was about whether the rig count would fall by 100-200 rigs or experience a more severe correction of 300-400 rigs.
    As soon as investors began to focus on the impact of the larger drop, market conditions worsened with crude
    oil falling to the $50 a barrel level in response to weakening global oil demand. Falling oil prices and a further tightening of credit markets caused analysts to begin to think that the rig count drop might be even greater than they had been thinking.
    Recently, the view began to target the potential for a 600-rig drop during the seasonally weak early months of 2009. Last week the prospect of a 700-800 rig drop emerged as a possibility and as that view began to gain some traction, the oilfield service stocks began to dive. The Philadelphia Oil Service Index (OSX) fell Thursday by 11.06 points to 104.14, a decline of 9.6%. Intraday the OSX dropped 13.47 points to 101.73, a fall of 11.7%. It dropped further early in Friday’s trading (to the 98 level) as crude oil plunged into the $41 a barrel range.
    The Baker Hughes domestic rig count peaked in September and then slumped some, although some of that fall off may have been related to the impact of hurricanes Gustav and Ike on oilfield activity.
    The rig count then rallied back to within 2% of the peak count before starting its current slide. In the prior two weeks (excluding the week ending December 5), the rig count has started to fall like a rock, declining by 51 and then 45 rigs. These drops were 2.6% and 2.4%, respectively, of the active rig count the prior week.
    When we have written about the stock market performance of oilfield service stocks, we have focused on the similarity of their track record since the start of 2000 to that of the 1973-1983 period. We thought we would look to see how the Baker Hughes rig count fared in the same comparison. It shows a very similar pattern -- the peak in the rig count has come almost exactly to the week of that historical period peak. The rig count did not rise as much as it did in the 1970s.
    What we thought would be interesting was to see how this rig count correction would look if we applied the pattern of the 1982-1983 decline period. Based on the forecast, the rig count, which peaked in September at slightly over 2,000 working rigs would fall to a low of about 1,000 rigs, or approximately a 50% correction. That pattern suggests that the estimates of the magnitude of the rig count drop might prove to be conservative.
    On the other hand, the 1982-1983 rig count drop initially fell by over 2,000 rigs but then rallied by about 300 rigs. It subsequently fell by about 700-800 rigs before hitting bottom in 1983 and starting to head back up. The rig count eventually sank a lot lower in 1986 when Saudi Arabia waged its war against fellow OPEC members who were cheating on their production and crude oil prices fell to the $10 a barrel level, but that’s another story.
    Based on our methodology, the rig count should decline by slightly over 1,000 rigs from the peak to the trough. Since the rig count has already fallen by 165 rigs, the 800-rig drop estimate recently made by Nabors Industries could prove pretty accurate, albeit not pretty. On the other hand there is a mitigating factor that could help prevent the rig count from falling as far – steeper natural gas production decline rates. Unfortunately, natural gas production continues to grow at a significantly stronger rate and forecasts call for more LNG coming to the U.S. as international gas producers will shift cargoes to here to support the gas pricing strength in Europe and Asia.
    More LNG along with growing domestic production does not auger well for natural gas prices in the future, which is important to support a higher drilling rig count.
    While we are not sure where the rig count may bottom out, we still are taken aback by the idea that the timing of the two rig-cycle peaks appears so close, especially when one remembers that we are talking about a 25-year gap between them. We will watch the rig count in ensuing weeks to see whether our forecast proves accurate, but it appears for the near term the direction of the rig count is straight down.

    A 1000 rig loss equates to 25-30 people per rig, so 30,000 blue collar workers directly effected. Then half that number that work in direct support industries to those rigs. ie: mechanics, electricians, welders etc. Then another 25-30 thousand that work in inderect support, third party contractors that work on those rigs periodically, ie: casing crews, cementers, well loggers. Then the truck drivers that move the rigs, haul equipment to them etc.
    So 1000 rig loss could easily equate to the loss of up to 100,000 jobs. 100,000 of your nieghbors. not mega salaried CEO's, but blue collared, hard working middle income men with families.

    The other factor to consider is the abandonment of costly oil recovery programs, like the Canadian tar sands. If the economy rebounds in the future the production of oil around the globe will be so curtailed that it will be a frenzy to ramp up again to meet escalating supply demands. Demand likely fueled by these bargain basement prices.

    And none of this takes into account the loss of revenue in oil producing states from the massive taxes that oil producers pay to those states.

    I hate seeing these news commentators orgasmically report on the falling price of gas everyday. They don't realize that every drop in price means more people out of work. The price of oil needs to get back up to aroung 70-80 dollars a barrel with gasoline prices in the $2.50 to $3.00 a gallon range. That would keep the oil industry going, taxes flowing into state coffers, and would not be a burden on consumers. But I am afraid that what will happen is a dramatic rise again that will surpass the previous "all time highs".

    The maxim holds true "What goes up must come down, or in this case, what goes down, must come back up again."


  13. Minuteman

    Minuteman Chaplain Moderator Founding Member

    You knew it was coming. What goes down must go up.

    Expect higher gas prices down the road
    By John Porretto
    Associated Press
    Posted: 01/07/2009 12:01:00 AM CST

    HOUSTON — All that money you're saving these days at the gas pump? You might want to put it in the bank.
    The same cheap oil that's providing relief to drivers and businesses in an awful economy is setting the stage for another price spike, perhaps as soon as next year, that will bring back painful memories of last summer's $4-a-gallon gas.

    The oil industry is scaling back on exploration and production because some projects don't make economic sense when energy prices are low. And crude already is harder to find because more nations that own oil companies are blocking outside access to their oil fields.

    When the world emerges from the recession and starts to burn more fuel again, higher demand meets lower supply and prices almost certainly will shoot higher.

    Some analysts say oil eventually could eclipse $150 a barrel, maybe even on its way to $200. In such a scenario, gasoline would easily cost more than the record high of $4.11 a gallon set last summer. Oil trades at about $50 today.

    No one knows for sure, but some analysts say the spike could happen as soon as next year, perhaps in 2011 or 2012.
    "I think those supply limits will come back to bite with a vengeance," said Sean Brodrick, a natural resources analyst at Weiss Research Inc.
    High prices at the pump last summer — more than $4 per gallon for gas on average — helped slash demand for oil. From November 2007 to October 2008, Americans drove 100 billion fewer miles
    than the year before, according to government figures. The nation's biggest automakers lurched toward bankruptcy as sales of sport utility vehicles and trucks plummeted.

    "We wouldn't be bailing out the automobile industry today ... had we not had this crazy situation with oil prices," said Daniel Yergin, chairman of Cambridge Energy Research Associates, a consulting firm, and author of "The Prize," the Pulitzer Prize-winning history of the oil industry.

    Oil giants like Exxon Mobil, Chevron and ConocoPhillips have yet to announce their 2009 capital spending plans, but analysts say even the cash-rich companies are likely to shelve some projects.

    Already, Royal Dutch Shell has postponed a near-doubling of production in Canada's oil sands — an operation that analysts say only makes economic sense when oil is about $20 a barrel more expensive than it is now. Marathon Oil says it expects to cut capital spending by 15 percent in 2009.

    Brodrick said canceled or postponed oil and gas projects could contribute to a drop of 7 percent or more in global oil production this year.
    Smaller oil producers could cut spending by 30 percent, said Oppenheimer & Co. analyst Fadel Gheit. The majority of U.S. crude and natural gas
    is supplied by smaller, independent companies, not the Exxons and Chevrons, and smaller producers have been forced to pull back because of frozen credit markets.

    All this comes as the Organization of Petroleum Exporting Countries, which controls about 40 percent of world crude supplies, embarks on its biggest single production cut ever.
    Already, the futures markets are pricing in more expensive oil. While a barrel of light, sweet crude for February delivery costs about $50, the market for September oil is more than $60

  14. ghrit

    ghrit Bad company Administrator Founding Member

    Already started back up around here. Was at 1.759 last Monday, up to 1.799 today.
  15. Tango3

    Tango3 Aimless wanderer

    $1.89 reg today.
  16. toemag

    toemag Monkey++

    €1.18 for a litre of reg unleaded here in Germany, just how many litres are there in a Gallon? and what is the exchange rate $ to €'s? when crude was costing $100+ we were still only paying €1.50+ a litre, so why hasn't the price halved....

    Enjoy it while it lasts.

  17. Brokor

    Brokor Live Free or Cry Moderator Site Supporter+++ Founding Member

    This may be a long shot, but the return of control to the Iraqi's coincides with the gas price change, as we were certainly in control before January 1st, and now they have the reigns. What I am thinking here is basic economics -increased oil prices to augment the cost of occupation, of course the question now remains...where did all the money go?

    As these lower gas prices continue amidst the now flattened American economy, the benefits seem a little too late, and still too high for the current situation at hand.
  18. ghrit

    ghrit Bad company Administrator Founding Member

    3.96 liters to the gallon. Today's exchange rate is a buck 36 to the euro. Call it USD 6.35 a gallon. For comparison, it's pretty close to USD 10 per gallon in Singapore.
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