The True Reason Gas Prices are Falling

[longknife]

(Hint: It’s Not Because of Green Energy)


An excellent piece that isn't getting the kind of attention it deserves. OPEC no longer the power bloc in world energy prices? Saudi realizing its power is now weakened? And North America becoming a major petroleum exporting giant.


Great for us and not so great for others.


Read more of this excellent piece @ The True Reason Gas Prices are Falling Hint It s Not Because of Green Energy


And then comes this - Slumping oil prices not slowing Texas boom @ Slumping oil prices not slowing Texas boom


And the following from this piece is excellent news:


Nationally, the energy boom unleashed by fracking in 2012 led to 2.1 million jobs, generated nearly $75 billion in federal and state tax revenues, and contributed $283 billion to the U.S. GDP, according to a report last year by IHS, a research and consultancy firm. By 2020, this will grow to 3.3 million jobs, more than $125 billion in tax revenue, and more than $468 billion in GDP, it said.

 

[waltky]

Granny says, "Dat's right - `cause dey gots more money n' God from gougin' ever-body atta gas pumps...

Oil giants Exxon, Chevron shrug off effect of low prices
Sun, Nov 02, 2014 - Falling oil prices hardly seem to be bothering the two biggest US oil companies, but things could get tougher in the coming months.

Exxon and Chevron leaned on strong performances from their refining operations to increase profits in the third quarter, despite plummeting global oil prices. The global price of oil fell 18 percent from the beginning of the quarter to the end, and it cost both companies. Revenue slipped at Exxon by 4 percent and at Chevron by 8 percent. However, low oil and natural gas prices make for low raw material costs — and higher profit — for refining and chemical operations, which turn oil and gas into fuels and chemicals. Profit at Exxon’s refining and chemicals operations rose 38 percent compared with a year earlier, and Chevron’s profit from its so-called downstream operations more than tripled.

Those results helped Exxon’s overall earnings rise 3 percent in the quarter to US$8.07 billion. Chevron’s earnings rose 13 percent to US$5.59 billion. The trend lately has been for integrated oil and gas companies, which own production, refining and distribution assets, to spin off their refining operations into different companies in an effort to better appeal to investors. ConocoPhillips, Marathon and Hess have all exited refining in recent years. Exxon chief executive officer Rex Tillerson on Friday defended his strategy of remaining integrated. He said in a statement that the company’s strong results “demonstrated the strength of our integrated business model.”

An Exxon gas station is pictured in Arlington, Virginia, on Jan. 31, 2012. Exxon Mobil Corp, the world’s largest publicly traded oil company, has reported a better-than-expected 3 percent increase in quarterly profit.

Integration, he said, “gives us competitive advantages in scale, efficiency, technical and commercial capabilities, regardless of market fluctuations.” Exxon and Chevron joined rival Royal Dutch Shell in posting rising earnings for the quarter. However, other major oil international oil companies, such as BP, ConocoPhillips and Total, saw earnings fall in the third quarter on lower oil prices. However, all may suffer in the fourth quarter. The slide in oil prices accelerated early last month, at the beginning of the quarter, and reached lows not seen in four years. If prices remain low or continue to fall, it could create declines too large for better refining results to cover.

Also, a reason oil prices have fallen so far is that demand for fuels is weakening around the world, which could limit output and profit gains at refining operations. However, Exxon, unlike nearly every other major oil company, said lower global oil prices would not change its plans to invest in new projects. And it suggested in a call with investors that the drop in oil prices might be a good time to use its cash to buy undervalued assets. “We continue to invest through the cyclical nature of our business,” said Jeff Woodbury, Exxon’s vice president of investor relations. “We’re a long-term business.”

Oil giants Exxon Chevron shrug off effect of low prices - Taipei Times

Uncle Ferd says it's `cause Obama an' the Saudis worked out a backdoor deal - we fight ISIS fer `em an' dey lower oil prices a bit.

 

[OnePercenter]

The reason that oil prices are down: Saudi's are screwing with Putin.......

 

[Politico]

LOL. $2.77 is not a good price for gas. Not even close.

 

[priceless]

The real reason gas prices are falling is because of growing demand elasticity. Media is promulgating the idea that fuel prices are decreasing due to abundant supply and supply-side competition in order to stimulate consumer confidence that prices will remain at current levels and/or continue decreasing.

Why? Because the more oil-dependency grows, the less elasticity in the demand elasticity, which translates to a stronger ability to raise fuel prices without losing sales. In short, they want consumers as dependent/enslaved to fuel consumption as possible. If it was up to them, it would be impossible to do anything without driving or shipping something using internal-combustion power.

Green power is part of the threat to oil demand but there are numerous other factors as well. The global economy is growing ever more energy-independent and energy peddlers hate and fear the prospective ability for consumers and businesses to simply circumvent fuel and other energy use by alternative economic means.

The question is whether they will find ways to re-subjugate everyone into greater fuel/energy dependency or whether they will find some other way to prosper economically without relying on fuel/energy sales.

 

[American Horse]

A large part of the price of oil is because of speculation and the American recent development of shale oil has removed to a great degree speculation re oil even as to the Persisn Gulf and Arabian Peninsula.

Gas and oil prices were high before the massive development of America's new sources and prices stayed high in spite of the slowdown of economic activity before, during, and after the financial crisis.

The exception all else being equal is the American-centric developments that have moved more and more oil into gasoline here.

The US is now the world's largest oil producer and is even a gasoline exporter by large tanker ship.

Having a stable supplier of oil for the markets (commodities markets) does more than anything to settle the world price of oil even in times of turmoil in the middle east.

It also makes it harder for OPEC to raise the price, and all of this including certain strictures on the distribution of oil within the US and a declining world economy play a roll in the lowering price of gasoline in the US

But, in addition to all that, when oil prices fall down around $65-$75 the smaller drillers will be operating with too small a margin to turn a profit and they will cut back production which will reduce supply. if demand remains the same which is likely in the present world economy prices will again begin to rise in spite of that economy.

Another significant factor is the cost of transferring oil by rail versus by pipeline or truck. That additional cost by rail is about $7 a barrel and while Canadian tar sands oil is a little cheaper at the wellhead than american frakked oil, their oil priduction can also become affected by dropping oil prices, next after the Dakota Bakken shale oil.

There will be a lot of scrambling around to get oil to refining facilities more efficiently. Canada is seriously looking at building a major pipeline to the east coast in the next couple of years.

Oil production has become about the second largest economic sector up there and they are going to strenuously resist losing that production, or leaving it in the ground.

 

[boedicca]

Three reasons:

- U.S. oil production has increased (no thanks to Obama) due to fracking and private investment.
- Saudi Arabia is freaking out and lower prices to try to dampen U.S. production.
- Demand is suppressed due to the fact that the Global Economy sucks.

 

[Judicial review]

One word politics.

 

[American Horse]

Politics always plays a role in a major world commodity of such extraordinary consequence, but to say "one word..." overstates it.

Right now Obama is playing politics with the Keystone Pipeline saying that all that Canadian oil will only pass through our land on the way to the coast to be shipped out into world markets, but the Canadian oil is part of the equation (along with US oil) that is keeping world prices stable and therefore in decline if only by removing some of the speculative factor.

Politics on a global scale enters in the pricing of oil out of Saudi Arabia, in that that hold prices down to hurt Iran, but not too low. It's a very complex issue but in the main supply and demand play the largest role.

Here's a short (270 word) editorial in the WSJ today that points out the political versus the practical:

" - Obama’s Latest Economics Lesson
He says the Keystone XL pipeline will merely transport ‘their oil.’
Nov. 14, 2014 6:54 p.m. ET
Sometimes we wonder if President Obama has even the vaguest idea how a private economy works. The latest reason to doubt came Friday in Burma, where Mr. Obama was asked at a press conference about the Keystone XL pipeline, which has been waiting for approval for the length of his Presidency. The pipeline would allow oil to flow from Canada all the way to the Gulf Coast.
In off-the-cuff remarks, Mr. Obama managed to insult our great northern neighbors while suggesting that the project would be no help to U.S. workers or consumers. “Understand what this project is: It is providing the ability of Canada to pump their oil, send it through our land, down to the Gulf, where it will be sold everywhere else. It doesn’t have an impact on U.S. gas prices.”
Someone should tell the President that oil markets are global and adding to global supply might well reduce U.S. gas prices, other things being equal. A tutor could add that Keystone XL will also carry U.S. light oil from North Dakota’s Bakken Shale. So even if he thinks that bilateral trade only helps Canada, he’s still wrong about Keystone.
“If my Republican friends really want to focus on what’s good for the American people in terms of job creation and lower energy costs,” the President added, “we should be engaging in a conversation about what are we doing to produce even more homegrown energy.” Mr. Obama routinely entreats Congress to spend taxpayer money on “infrastructure” to create jobs, yet he implies that the 1,179-mile Keystone infrastructure project won’t create jobs. Perhaps (see editorial above) Mr. Obama really does think the American people are stupid." -

Obama gets money from certain green supporters and he sees a really stable oil supply counter productive to green (renewable alternatives) sources of energy. In that regard he doesn't want the price of gasoline nor oil to remain low, even if it imperils US (North American) security to play that game.

That' political, but it's not to make gas prices lower; that's happening irrespective of politics.

 

[Mr. H.]

I'm broke. Have fun, fuckers.

 

[Judicial review]

I'm broke. Have fun, fuckers.

Too many lap dances?

 

[OnePercenter]

Saudi's are screwing with Putin.......

 

[dilloduck]

Saudi's are screwing with Putin.......

More than just the Saudi's but I agree. Putin is being punished.

 

[Roadrunner]

LOL. $2.77 is not a good price for gas. Not even close.

I prefer $.88.

 

[Roadrunner]

Saudi's are screwing with Putin.......

More than just the Saudi's but I agree. Putin is being punished.

China is punishing him by buying all he can get them.

 

[dilloduck]

Saudi's are screwing with Putin.......

More than just the Saudi's but I agree. Putin is being punished.

China is punishing him by buying all he can get them.

Apparently they are not one of the countries punishing him right now.

 

[Judicial review]

Politics!!!!!!!!!

 

[OnePercenter]

More than just the Saudi's but I agree. Putin is being punished.

Nope. The market is fixed. The big players can manipulate it whichever way they want.

 

[OnePercenter]

China is punishing him by buying all he can get them.

Are they paying the $80.00/barrel profit nut that he needs?