Posts Tagged ‘gas prices’

Fossil Fuels Rule: America’s Low Gas Prices are in Spite of Obama…Not Because of Him

January 21, 2016

thHZLU1X9GWednesday Evening, I had to drive to my local Kroger Grocery and buy some Old El Paso Refried Beans because my wife decided to make Homemade Enchiladas for dinner.

(Trust me. The trip was worth it.)

Anyway, while I was there, I noticed that the price of gas at their Kwik Shop was $1.52.99 per gallon.

What happened to the “rebound” in gas prices, predicted by all of the “Pundits”, Professional and Internet, several months ago?

Back on December 7, 2015, the New York Times published the following explanation…

The oil industry, with its history of booms and busts, is in its deepest downturn since the 1990s, if not earlier.

Earnings are down for companies that have made record profits in recent years, leading them to decommission roughly two-thirds of their rigs and sharply cut investments in exploration and production. An estimated 250,000 oil workers have lost their jobs, and manufacturing of drilling and production equipment has fallen sharply.

The cause is the plunging price of a barrel of oil, which has been cut roughly by more than 60 percent since the June 2014.

Prices have recovered a few times last year, but a barrel of oil has already sunk this year to its lowest level since 2004. Executives think it will be years before oil returns to $90 or $100 a barrel, pretty much the norm over the last decade.

…Why has the price of oil been dropping so fast? Why now?

This a complicated question, but it boils down to the simple economics of supply and demand.

United States domestic production has nearly doubled over the last several years, pushing out oil imports that need to find another home. Saudi, Nigerian and Algerian oil that once was sold in the United States is suddenly competing for Asian markets, and the producers are forced to drop prices. Canadian and Iraqi oil production and exports are rising year after year. Even the Russians, with all their economic problems, manage to keep pumping.

There are signs, however, that production is falling in the United States and some other oil-producing countries because of the drop in exploration investments. But the drop in production is not happening fast enough, especially with output from deep waters off the Gulf of Mexico and Canada continuing to build as new projects come online.

On the demand side, the economies of Europe and developing countries are weak and vehicles are becoming more energy-efficient. So demand for fuel is lagging a bit.

Who benefits from the price drop?

Any motorist can tell you that gasoline prices have dropped. Diesel, heating oil and natural gas prices have also fallen sharply.

The latest drop in energy prices — regular gas nationally now averages under $2 a gallon, roughly down about 14 cents from a year ago — is also disproportionately helping lower-income groups, because fuel costs eat up a larger share of their more limited earnings.

Households that use heating oil to warm their homes are also seeing savings.

Who loses?

For starters, oil-producing countries and states. Venezuela, Iran, Nigeria, Ecuador, Brazil and Russia are just a few petrostates that are suffering economic and perhaps even political turbulence. Persian Gulf states are likely to invest less money around the world, and they may cut aid to countries like Egypt.

In the United States, Alaska, North Dakota, Texas, Oklahoma and Louisiana are facing economic challenges.

Chevron, Royal Dutch Shell and BP have all announced cuts to their payrolls to save cash, and they are in far better shape than many smaller independent oil and gas producers that are slashing dividends and selling assets as they report net losses. Other companies have slashed their dividends.

About 40 companies in North America have gone into bankruptcy protection.

What happened to OPEC?

A central factor in the sharp price drops, analysts say, is the continuing unwillingness of OPEC, a cartel of oil producers, to intervene to stabilize markets that are widely viewed as oversupplied.

Iran, Venezuela, Ecuador and Algeria have been pressing the cartel to cut production to firm up prices, but Saudi Arabia, the United Arab Emirates and other gulf allies are refusing to do so. At the same time, Iraq is actually pumping more, and Iran is expected to become a major exporter again under the recent nuclear deal.

Saudi officials have said that if they cut production and prices go up, they will lose market share and merely benefit their competitors. They say they are willing to see oil prices go much lower, but some oil analysts think they are merely bluffing.

If prices remain low for another year or longer, the newly crowned King Salman may find it difficult to persuade other OPEC members to keep steady against the financial strains. The International Monetary Fund estimates that the revenues of Saudi Arabia and its Persian Gulf allies will slip by $300 billion this year.

Is there a conspiracy to bring the price of oil down?

There are a number of conspiracy theories floating around. Even some oil executives are quietly noting that the Saudis want to hurt Russia and Iran, and so does the United States — motivation enough for the two oil-producing nations to force down prices. Dropping oil prices in the 1980s did help bring down the Soviet Union, after all.

But there is no evidence to support the conspiracy theories, and Saudi Arabia and the United States rarely coordinate smoothly. And the Obama administration is hardly in a position to coordinate the drilling of hundreds of oil companies seeking profits and answering to their shareholders.

When are oil prices likely to recover?

Not anytime soon. Oil production is not declining fast enough in the United States and other countries, though that could begin to change this year.

Demand for fuels is recovering in some countries, and that could help crude prices recover in the next year or two. There is now little or no spare production capacity to give the market a cushion in case of another crisis in a crucial oil-producing country.

The history of oil is of booms and busts followed by more of the same.

Imagine that.

It all boils down to the Law of Supply and Demand.

As the article shows, gas prices rise and fall in response to worldwide economic conditions, production decisions made by oil-producing nations, and the investment decisions of oil companies.

President Barack Hussein Obama, despite what all of the “Smartest People in the Room” on Facebook and Internet Chat Boards may claim, has nothing to do with it.

In fact. this is happening, in spite of Obama’s failed push of failed means of “Alternative Energy.”

Remember Solyndra and the Chevy Volt?

Last February, The Institute for Energy Research posted the following interesting (and depressing) fact…

The Taxpayers Protection Alliance produced a report highlighting information from various studies on the U.S. subsidization of solar power. Over the last 5 years, taxpayers spent over $150 billion on solar power and other renewable projects, financing grants, subsidizing tax credits, guaranteeing loans, and bailing out failed solar energy companies, according to the Brookings Institute. According to the Government Accountability Office, federal government support for solar energy is massive, with over 345 different federal initiatives covering over 1,500 projects in 20 federal agencies–the Pentagon has 63 solar programs, the highest among the agencies, followed by the Interior Department, with 37 programs and the Energy Department (DOE) with 34 solar programs. For example, DOE’s Sunshot Initiative spends $270 million per year to “induce companies to lower production and installation costs associated with photovoltaic solar panel systems and reducing the price of solar power.” Last month the Energy Department announced an additional $59 million for “solar deployment plans.”[iii]

By now, entering the last year (Praise the Lord) under the reign of Emperor Obama the First, we were all supposed to be driving around in electric cars, with solar-powered windmills in our front yards.

Instead, I had to pay a $128 Water Bill last month, because the toilet needed a new $1.78 flapper.

But, I digress…

While the search for “Alternative Energy” has continued to be a Quixotic Liberal Government Quest, funded through the use of OUR money, the use of Fossil Fuels, despite all of Obama and the rest of the tree-hugging Environmental Whackos’ claims,  continues to be a cheap, efficient energy source.

As I posted on Facebook and Twitter, yesterday…

Financial Insecurity 12016

 

America’s falling gas prices are brought to us, courtesy of Capitalism, not Government-Sponsored Marxist Theory.

So, Tree-hugging Environmental Whackjob Liberals…

Put that up your tailpipes.

Until He Comes,

KJ

 

 

 

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Obama Refuses to Touch Out-of-Control Gas Prices

March 8, 2012

During a speech given Wednesday in Mount Holly, North Carolina, at the Daimler Truck Manufacturing Plant, President Barack Hussein Obama remarked, as reported by The Weekly Standard:

Looks like somebody might’ve fainted up here, have we got . . . Somebody . . . EMS . . . Somebody . . Don’t worry about it: Folks do this all the time in my meetings. You always got to eat before you stand for a long time–that’s a little tip. They’ll be OK, just make sure–give them a little room.

If you haven’t heard about the whoppers he told in this speech, you had better sit down…you’re probably going to faint, too.

Here’s an excerpt from the transcript at whitehouse.gov:

Now, here’s the thing, though — this is not the first time we’ve seen gas prices spike. It’s been happening for years. Every year, about this time, gas starts spiking up, and everybody starts wondering, how high is it going to go? And every year, politicians start talking when gas prices go up. They get out on the campaign trail — and you and I both know there are no quick fixes to this problem — but listening to them, you’d think there were.

As a country that has 2 percent of the world’s oil reserves, but uses 20 percent of the world’s oil — I’m going to repeat that — we’ve got 2 percent of the world oil reserves; we use 20 percent. What that means is, as much as we’re doing to increase oil production, we’re not going to be able to just drill our way out of the problem of high gas prices. Anybody who tells you otherwise either doesn’t know what they’re talking about or they aren’t telling you the truth.

Here is the truth. If we are going to control our energy future, then we’ve got to have an all-of-the-above strategy. We’ve got to develop every source of American energy — not just oil and gas, but wind power and solar power, nuclear power, biofuels. We need to invest in the technology that will help us use less oil in our cars and our trucks, in our buildings, in our factories. That’s the only solution to the challenge. Because as we start using less, that lowers the demand, prices come down. It’s pretty straightforward. That’s the only solution to this challenge.

And that’s the strategy that we’ve now been pursuing for the last three years. And I’m proud to say we’ve made progress.

Since I took office, America’s dependence on foreign oil has gone down every single year. In fact, in 2010, it went under 50 percent for the first time in 13 years.

You wouldn’t know it from listening to some of these folks out here — (laughter) — some of these folks — (laughter) — but a key part of our energy strategy has been to increase safe, responsible oil production here at home. Under my administration, America is producing more oil today than any time in the last eight years. Under my administration, we’ve quadrupled the number of operating oilrigs to a record high. We’ve got more oilrigs operating now than we’ve ever seen. We’ve opened up millions of new acres for oil and gas exploration. We’ve approved more than 400 drilling permits that follow new safety standards after we had that mess down in the Gulf.

We’re approving dozens of new pipelines. We just announced that we’ll do whatever we can to speed up construction of a pipeline in Oklahoma that’s going to relieve a bottleneck and get more oil to the Gulf — to the refineries down there — and that’s going to help create jobs, encourage more production.

So these are the facts on oil production. If somebody tells you we’re not producing enough oil, they just don’t know the facts.

But how much oil we produce here at home, because we only have 2 percent and we use 20, that’s not going to set the price of gas worldwide, or here in the United States. Oil is bought and sold on the world market. And the biggest thing that’s causing the price of oil to rise right now is instability in the Middle East. You guys have been hearing about what’s happening with Iran; there are other oil producers that are having problems. And so people have gotten uncertain. And when uncertainty increases, then sometimes you see speculation on Wall Street that drives up gas prices even more.

But here’s the thing. Over the long term, the biggest reason oil prices will go up is there’s just growing demand in countries like China and India and Brazil. There are a lot of people there. In 2010 alone, China added nearly 10 million cars on its roads. Think about that — 2010, 10 million new cars. People in China, folks in India, folks in Brazil — they’re going to want cars, too, as their standard of living goes up, and that means more demand for oil, and that’s going to kick up the price of oil worldwide. Those numbers are only going to get bigger over time.

So what does that mean for us? It means we can’t just keep on relying on the old ways of doing business. We can’t just rely on fossil fuels from the last century. We’ve got to continually develop new sources of energy.

And that’s why we’ve made investments that have nearly doubled the use of clean, renewable energies in this country. And thousands of Americans have jobs because of it. It also means we’ve got to develop the resources that we have that are untapped, like natural gas. We’re developing a near hundred-year supply of natural gas -– and that’s something that we expect could support more than 600,000 jobs by the end of the decade.

And that’s why we’ve worked with the private sector to develop a high-tech car battery that costs half as much as other batteries and can go up to 300 miles on a single charge. Think about that. That will save you some money at the pump. And that is why we are helping companies like this one right here and plants like this one right here to make more cars and trucks that use less oil.

Still trying to line the pockets of your “investors”, huh, Mr. President?  I’m all for future progress, but what you’re proposing does nothing to deal with the reality of average American not being able to afford to fill up their gas tanks, in order to make it to their jobs.

Americans need relief at the gas pumps NOW, Mr. President.

Remember these words you repeated, a few years ago?

I do solemnly swear (or affirm) that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect, and defend the Constitution of the United States.

Nowhere in the Oath of Office do I see the words:

“I will line the pockets of my friends and investors, now matter how it ruins America’s economy or impacts its citizens.”

P.S.  We don’t want to “be like Europe”.  We’re America!

Heck of a job there, Barry.