texaspackerbacker
10 years ago
They're dropping; That's a good thing, right?

The price here at Valero was $2.51 a gallon, just 2 cents higher than the price the day before Hurricane Katrina nearly a decade ago. That's a full dollar a gallon under the maximum less than a year ago.

Why the big decrease? The obvious answer is oil prices are dropping - down to about $77 a barrel for crude now, but what is causing that decrease? It could be new sources - the Bakken formation in the Dakotas or rejuvenation of old oil fields with fracking, etc. Another theory I'm heard is that demand for gasoline is low due to economic downturn. I find that a little bit hard to believe. I have also heard that if the price of oil drops below $75 a barrel, the economy goes in the toilet in the various oil countries - primarily Russia and Saudi Arabia, but also places like Iran and Venezuela - clear enemies of America - will be in serious jeopardy. I had this far-fetched idea that maybe the Insiders/banking interests/etc. WANT that to happen - it sounds good to me anyway.

I'm happy with the situation, but then I'm a fairly happy and optimistic person in general. Comments?
Expressing the Good Normal Views of Good Normal Americans.
If Anything I Say Smacks of Extremism, Please Tell Me EXACTLY What.
yooperfan
10 years ago
$2.99 here in Ishpeming.
Still too high considering the price of oil.
We are routinely the highest price in Michigan here in da U P.
Zero2Cool
10 years ago
Green Bay we're a shade below $3 per gallon for 87. I have a car that gets over 30mpg so gas costs haven't really been something I think twice about. When I had my old '96 Explorer and getting 16mpg, gas was a huge budget concern, lol.
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Rockmolder
10 years ago

They're dropping; That's a good thing, right?

The price here at Valero was $2.51 a gallon, just 2 cents higher than the price the day before Hurricane Katrina nearly a decade ago. That's a full dollar a gallon under the maximum less than a year ago.

Why the big decrease? The obvious answer is oil prices are dropping - down to about $77 a barrel for crude now, but what is causing that decrease? It could be new sources - the Bakken formation in the Dakotas or rejuvenation of old oil fields with fracking, etc. Another theory I'm heard is that demand for gasoline is low due to economic downturn. I find that a little bit hard to believe. I have also heard that if the price of oil drops below $75 a barrel, the economy goes in the toilet in the various oil countries - primarily Russia and Saudi Arabia, but also places like Iran and Venezuela - clear enemies of America - will be in serious jeopardy. I had this far-fetched idea that maybe the Insiders/banking interests/etc. WANT that to happen - it sounds good to me anyway.

I'm happy with the situation, but then I'm a fairly happy and optimistic person in general. Comments?

Originally Posted by: texaspackerbacker 



With the addition of your tight oil there are currently surpluses of oil being created.

Gas prices have dropped by 15 cents per litre over here, as well. That's even more amazing, seen the fact that 63% of gas prices here are taxes.
wpr
  • wpr
  • Preferred Member
10 years ago
$2.99 in my town. Usually higher than the larger towns around us. $2.83 to $2.89 in them depending on which one and what station. Saw gas was $2.76 a month ago about 30 min south of St Lou a month ago. It must be lower now. We were around $3.15 back then.

It was a month or more ago when I heard there are a few reasons for the lower prices. There are more cars like Zero's out there lowering demand. The Feds got the Saudis to agree to keep pumping their large amount of oil despite the falling price. The Feds are trying to stick to to Russia as a back door diplomacy for stealing Ukraine. Also the switch from the summer blend to the winter blend contributed. Makes no sense to me as the price use to go up when they switched back and forth as it created an artificial shortage for a while.
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dfosterf
10 years ago
2.99 here in PA. Ed Rendell laid another tax on gas when he was in office, so even though we have lots of refining and network here that would have likely given us some of the lowest prices in the nation, we instead get to give our energy infrastructure savings to the teacher's unions that don't educate our kids.

D.C. was 15 cents a gallon cheaper than us when I was down there a couple of weeks ago.
PackFanWithTwins
10 years ago
One theory I was told, can't confirm nor deny the validity of the claim is that at around $60-$70/barrel, it starts to become unaffordable to produce oil through Fracking. And lowering the price of oil is a way to stop that production. Saudis can produce oil at a cost of about $30/barrel so they can drive the fracking competition out.
The world needs ditch diggers too Danny!!!
texaspackerbacker
10 years ago

One theory I was told, can't confirm nor deny the validity of the claim is that at around $60-$70/barrel, it starts to become unaffordable to produce oil through Fracking. And lowering the price of oil is a way to stop that production. Saudis can produce oil at a cost of about $30/barrel so they can drive the fracking competition out.

Originally Posted by: PackFanWithTwins 



That doesn't seem like something that would be good for the Saudis - $60 a barrel with $30 profit compared to $90 a barrel with $60 profit - If they sell twice as much oil, they only make the same money, and even Saudi oil is not infinite. That would, however, be good for us - lower cost energy now, and we could always resume fracking if/when prices go back up.

I still lean toward the manipulation theory - stick it to the damn Russkies - and Iranians and Venezuelans too.


Expressing the Good Normal Views of Good Normal Americans.
If Anything I Say Smacks of Extremism, Please Tell Me EXACTLY What.
Wade
  • Wade
  • Veteran Member
10 years ago
Rising gas/oil prices make innovation in production (e.g., fracking) more likely. (pre-innovation, the new processes "cost a lot")

BUT

Innovation in production leads to lower prices (post-innovation, the new processes are "cheaper").

[Only real exception: when the innovation is done via subsidy (see, generally, "alternative energies"). Why? Because the subsidy fails to provide the same incentive to reduce the cost of the innovative process the way the price mechanism does. Why bother find ways to reduce the real costs? You're going to get paid by the subsidizer, after all.]

The notion that fracking is going to go bye-bye because of oil prices falling too low is dreaming. It might slow expansion of development of Bakken, the Permian Basin, etc., a bit, but the reality is that fracking tech is cheaper all the time.

And with it, the need to worry about what the Saudis might or might not be doing with their oil supplies matters less and less.

Hehe.



And do not be conformed to this world, but be transformed by the renewing of your mind, that you may prove what is that good and acceptable and perfect will of God.
Romans 12:2 (NKJV)
Wade
  • Wade
  • Veteran Member
10 years ago
Oh, and a bit of historical evidence probably only interesting to me:

Average price of gal of gas in 1982: $1.30.
Average price of gal of gas in 2013: $3.60.
Works out to an average annual increase of approximately 3.2%/year.
(price of gasoline doubles roughly every 23 years).

Cost of living (CPI, average consumer, excluding gasoline expenditures)(1982-1984 dollars) in 1982: 96.5
Same, but in 2013: 233.0
Works out to an average annual increase of approximately 2.8%/year.
(average cost of living doubles roughly every 26 years).

What would be really interesting would be to add to this story the increased productivity between 1982 and today that happened at the same time as this (IMO a lot smaller than most people think) increase in relative gas prices actually can be connected to. It's a more complicated computation, and I'm still not done with that grading, so I'm not going to do it (at least not now) but my gut feeling is that the benefits we've received from paying an additional 0.4% per year are a lot bigger than that.

Sources used to make calculations:
Gas prices:www.davemanuel.com/whatitcost.php
CPI: www.bls.gov
And do not be conformed to this world, but be transformed by the renewing of your mind, that you may prove what is that good and acceptable and perfect will of God.
Romans 12:2 (NKJV)
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