Welcome Back Sub-$1 Gas

[renovation]

Gasbuddy.com says several stations in Houghton Lake, Michigan have lowered their prices under $1 per gallon, in what appears to be a price war.

According to GasBuddy it appears these stations are currently the first stations in the country to see prices under $1 per gallon in years. As the situation unfolds, it's possible these stations re-raise prices back over $1/gallon.
78 cents per gallon was recorded at Beacon & Bridge Market while 95 cents per gallon was recorded at the Marathon in Houghton Lake.
http://www.fox2detroit.com/news/local-n ... 5172-story
and im in florida now were gas was $1.81 when i looked earlyer today at a Citco gas station.

[FlyingPenguin]

No one want to hear this, but gas needs to get back north of $2 a gallon (should be closer to $3), or it's going to destroy our economy.

Thanks to shale oil and advanced oil recovery systems, we are now one of the worlds largest oil producers again and have been exporting more then importing for the first time in a long time. But all those high-tech oil recovery systems are not cost effective when oil is this below $40 a barrel. If this persists, it's going to cost jobs and trade imbalances. It will also affect all the industries that supply the oil industry with equipment and materials.

[wvjohn]

It's a big mess, all the producers, esp. shale, are way underwater on their debt and have to keep pumping at a loss just to generate cash to make interest payments. The whole world commodity market is crashing big time b/c china is slowing way down in mfg.

As for the US being a net exporter, if you dig around you can find that the US is still importing a lot of oil. Last time I dug through the #s - which was at least 6 months ago - it was like 5-7 million barrels a day, with 10% of the comping from Russia. We do sell refined oil because we have the refinery capacity to buy stuff/refine it/sell it. If the foreign oil stopped rolling in it would be worse that 1972, because all of our major fields, like Alaska, are playing out.

[wvjohn]

Still importing about 8mm barrels a day per WSJ on Oct 26 2015. Total consumption for 2014 was about 19 mm barrels per day. https://www.eia.gov/tools/faqs/faq.cfm?id=33&t=6


http://www.wsj.com/articles/after-years ... 1445851800


U.S. imports of foreign oil are rising again after a long decline, as the oil bust forces domestic producers to scale back.

Less than a year after the Organization of the Petroleum Exporting Countries opted to continue production despite plummeting prices, member countries including Saudi Arabia and Iraq are clawing back market share they ceded to oil companies pumping in Texas and North Dakota.



U.S. crude imports declined 20% between 2010 and 2014 amid the domestic energy boom but have recently started to rise again. Total crude-oil imports rose for three straight months between April and July—a total of 1.7% in the period, according to the most recently available data from the Energy Information Administration. Imports of light crude grew more rapidly, from 5.6% of total imports in April to 11% in July.

On the Gulf Coast, vessels carrying nearly a week’s worth of imports waited offshore Friday to unload, according to shipping tracker ClipperData.

The slowdown in the nation’s shale-oil output has pushed up the price of high-quality U.S. oil relative to global prices, giving U.S. refiners a reason to buy from countries such as Nigeria. Until very recently, the boom in U.S. shale-oil production forced countries that exported oil to the U.S. to hustle for new customers.

Decreased reliance on foreign crude in the past few years has allowed the U.S. to be more flexible in its foreign policy and given the U.S. more global heft, politicians and analysts have said.

Now, the shifts in oil flows spurred by declining U.S. output show how some of the ripple effects of the shale-oil boom are going into reverse following the plunge in oil prices. U.S. oil producers have sharply cut spending on new drilling, and transportation companies that profited from shipping crude by rail and barge in recent years have seen volumes decline.
ENLARGE

“Production declines are taking hold,“ said Gary Ross, head of global oil at consulting firm PIRA Energy Group. “There is no surplus” of the type of crude oil extracted from shale-rock formations. “Light, sweet” crude, such as that produced from shale, is historically prized because it is easier to process into large amounts of gasoline and other fuels.

Globally, the glut of crude oil that sent prices tumbling last year still persists, and benchmark oil and gasoline prices remain near six-year lows. Falling U.S. output is unlikely to have an immediate impact on prices, because other countries are still pumping at high rates and Iran is expected to increase production in the coming months.

In the U.S., however, the adjustments have been swift. U.S. crude production has fallen to about 9 million barrels a day from a 43-year peak of 9.6 million barrels in April and is forecast to keep declining.

“There’s just not enough light barrels to go around today,” said Adam Bedard, chief executive of ARB Midstream, a shipping and trading company in Denver.

Still, the U.S. is importing less than eight million barrels of crude a day, down from 9.2 million daily barrels on average in 2010. The rate of imports could also decline at the end of the year, as refiners draw down inventories to avoid higher taxes.

But at the moment, the surge in imports continues to surprise. Total U.S. crude imports rose 156,000 barrels a day in the week ended Oct. 16, helping push the combined stockpiles of crude oil and refined products to a weekly all-time high.

The East Coast is one place where the pricing battle is being fought between domestic and foreign oil, said David St. Amand, president of maritime consulting firm Navigistics Consulting. Refiners that were willing to pay high transportation costs in recent years to ship domestic crude oil by rail and by barge are now finding it cheaper to import.

Crude imports to the East Coast shot up to 883,000 barrels a day in the week ended Oct. 16, up more than threefold from the prior week and the highest volume since early August, when U.S. oil demand tends to be seasonally high, according to the EIA.

Delta Air Lines Inc. ’s refinery in Trainer, Pa., imported Nigerian crude in July, according to the EIA, the first time that refinery has done so since September 2014. Monroe Energy LLC, Delta’s refining unit, declined to comment. After falling to zero in July 2014 and hovering at low levels since, shipments of crude from Nigeria to the U.S. rose to 106,000 barrels a day in July 2015.

The price of U.S. oil has started to draw close to the price of Brent, the global benchmark. That attracts more crude to the U.S. and indicates that imports can continue to rise.

With the gap between U.S. and international prices so narrow, refiners would “rather just start importing a more high-quality barrel instead,” said Dominic Haywood, oil analyst at Energy Aspects. “There’s a lot of imports on the way.”

At $43.98 a barrel, the U.S. benchmark, known as West Texas Intermediate, costs $3.56 a barrel less than the global benchmark, Brent crude. In the past four years, WTI’s discount to Brent was about $10 a barrel.

WTI could trade above Brent in 2016 as U.S. production continues to decline and gasoline demand remains strong, say analysts at Bank of America Merrill Lynch.

When U.S. output was rapidly growing in recent years, producers were forced to heavily discount their barrels to persuade refiners to buy domestic crude. U.S. refiners that were built to process foreign crudes, especially on the Gulf Coast, used more U.S. oil once it became significantly cheaper. But some types of shale oil caused problems for refiners.

In the first half of October, crude-oil imports to the Gulf Coast were 60,000 barrels a day higher than a year ago, according to ClipperData. The displacement [of imports] that we saw in 2013 and 2014 is definitely over,” said Abudi Zein, ClipperData’s chief operating officer.

[Pugsley]

And then you have idiots going hurr durr gas is cheap time to get into a SUV! then a few months go by and gas goes way up and they cant afford to drive it or buy a new one to replace it.

On top of it, it takes away incentives to alternative power sources.

[FlyingPenguin]

Yeah, I love how car sales skyrocket when gas is cheap... like it's going to last.

[renovation]

i think for the next 3-4 months gas price's well stay low . but watch as soon as the refinery's start gearing up to what they call the summer blend . we see gas prices creeping back up at that time.
i have to agree with pugsley do people will be buying these large sport utility . watch what happens as soon as gas prices start climbing again . they try dumping them . whats funny and im not sure its still true. but the state of Texas . alone bought enough GM suburban's to keep one assemble line going full time .

[wvjohn]

From what I read, the car dealers are doing everything they can to move inventory, back to the old if you're breathing you're qualified for a 40-50K loan to buy that suburban over 7 years. They are even offering financing for 6 years on used high end stuff. Not sure where the money for those payments is going to come from. It's crazy.

[renovation]

i have a brother in-law who in the last 6 month's leased a Hyundai Elantra for 4 years . im like are you kidding .im like are you kidding when he first told me. he still had to make a good size down payment . they took in a motor cycle (Harley Sportster. his chevy colbolt in lue of cash down payment.

[Executioner]

Here in my neck of the woods, northern CA, gas finally went below $2/gal. I used to live in southern CA, and the habits are different on both ends. In southern CA, you will see a lot more SUV's than in northern CA. Also in northern CA, you will see a lot more small cars such as Honda's and Toyota's along with electric cars.

[Key Keeper]

No one want to hear this, but gas needs to get back north of $2 a gallon (should be closer to $3), or it's going to destroy our economy.

Thanks to shale oil and advanced oil recovery systems, we are now one of the worlds largest oil producers again and have been exporting more then importing for the first time in a long time. But all those high-tech oil recovery systems are not cost effective when oil is this below $40 a barrel. If this persists, it's going to cost jobs and trade imbalances. It will also affect all the industries that supply the oil industry with equipment and materials.

I concur. Schlumberger had massive layoffs(1000+) as well as GE Oil and Gas division, and Baker Hughes following suit not long after. This uber cheap gas actually hurts us big time.