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AAA Sees U.S. Drivers Saving $75 Billion on Gasoline

The rout in crude oil prices may mean as much as $75 billion in gasoline savings for U.S. drivers in 2015, according to AAA. Americans saved $14 billion on the motor fuel last year compared with 2013, Heathrow, Florida-based AAA, the country’s largest motoring group, said by e-mail. Pump prices dropped a record 97 consecutive days to a national average of $2.26 a gallon yesterday, the lowest since May 12, 2009. A global glut of crude oil and a standoff between U.S. producers and the Organization of Petroleum Exporting Countries over market share has been a boon for consumers. U.S. production climbed in 2014 to the highest in three decades amid a surge in output from shale deposits. Oil capped its biggest annual decline since the 2008 financial crisis. “Next year promises to provide much bigger savings to consumers as long as crude oil remains relatively cheap,” Avery Ash, […]

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Get Used to Cheap Oil

ENLARGE Drilling for oil in North Dakota. U.S. production has soared to its highest level since 1986 due to new technologies enabling producers to access oil trapped in shale-rock formations. Minneapolis Star Tribune/Zuma Press Plunging oil prices in the second half of 2014 upended global economic forecasts, boosted consumer spending and roiled markets from Moscow to Midland, Texas. Now, analysts and investors—most of whom were caught off-guard when U.S. prices dropped from $107.26 a barrel in June to $53.27 a barrel Wednesday—are calling low prices the new normal. Investors and traders say a price recovery likely won’t come until the second half of 2015, as U.S. oil output keeps rising and subdued global growth weighs on demand. It will take months for the global glut of oil to shrink, market participants say. Producers will be slow to cut back on drilling, and consumers won’t change their buying habits right […]

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Good Times Run Out for Sand Producers

ENLARGE Freshly washed sand is sifted into piles, waiting to be dried, stored and shipped at Fairmount Santrol’s Wisconsin Industrial Sand Co. in Menomonie, Wis. Stephen Maturen for The Wall Street Journal “This isn’t our first rodeo” has become a catchphrase among oil-industry executives who are laying off workers and dialing back spending in the wake of tumbling crude-oil prices. But for many sand producers, this is their first time on the bucking bronco that is the cyclical energy business—and not all of them are ready for the wild ride, industry analysts say. Sand is an important ingredient in hydraulic fracturing, or fracking, which has pushed American oil output above 9 million barrels a day, rivaling the production of Saudi Arabia or Russia. Sand companies’ biggest customers used to be golf courses and glass manufacturers, but the oil boom brought energy clients to their door and now roughly 60% […]

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Energy Partnerships Lose Allure as Oil Prices Fall

ENLARGE One of the hottest trends in the energy industry in recent years, oil-and-gas drilling partnerships, is looking increasingly iffy in the face of falling crude oil prices. By organizing themselves as partnerships, energy producers can avoid corporate taxes and offer hefty dividend-like payments that are popular with investors. Executives of the new firms have raised money easily. The partnerships helped bankroll the U.S. shale boom, spending billions to buy known oilfields from cash-hungry drillers that, in turn, wildcatted for new prospects. But the 50% drop in crude-oil prices since the summer, combined with the lowest U.S. natural-gas prices in two years, has taken the shine off the so-called master limited partnerships that pump the fuels. Many are saddled with heavy debt loads. Some, with less cash to pay out to investors, are now weighing whether to cut their payouts, executives say. Fearing such a move, investors have sent […]

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US shale boom is same as dotcom bubble, says Russian oil executive

A chapopero, literally the tar man, shows his oil-covered hands after cleaning a waist-deep pond of spilled crude oil in La Venta, Mexico Photo: AP He said the current oil market was similar to the rise of the technology sector more than a decade ago that saw companies’ stock prices surge before collapsing several years later. “The shale boom is on a par with the dotcom boom. The strong players will remain, the weak ones will vanish,” added Mr Fedun, who is worth around $4bn. Lukoil did not return calls from The Telegraph for further comment. The price of a barrel of Brent crude oil dropped 6.7pc to $72.58 on Thursday, while WTI fell 6.3pc to $69.05. The sharp falls came after Opec’s members agreed to keep oil production levels at 30m barrels per day (bpd), following three days of talks in Vienna. The meeting ended in anger, with […]

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Hundreds with oil company get layoff notices

The price of oil continues to drop, and that now means mass layoffs for oil workers in Bakersfield. The Employment Development Department showed 700 people to be laid off by Ensign Energy Services, but that bad news came very suddenly for families, even with the threat of low oil prices looming overhead for months. “I’ve got six kids,” said Edgar Salazar, choking back tears. “It’s stressful on a man. I have to support my family some way or another.” Salazar was laid off just before Christmas. He’s a 14-year veteran of the oil industry and has never been unemployed. Now, he’s a casualty of those drastic declines in oil prices. “I’ve never seen it this bad,” he said. On Jan. 1, 2014, the price of oil per barrel was $99. Now, it has dropped to $48. “It basically impacts your life,” said Salazar. “I’d rather pay $4.80 a gallon […]

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Russia oil output hits post-Soviet high, small firms help

MOSCOW (Reuters) – Russia’s 2014 oil output hit a post-Soviet record high average of 10.58 million barrels per day (bpd), rising by 0.7 percent helped by small non-state producers, Energy Ministry data showed on Friday. Oil and gas condensate production in December hit 10.67 million bpd, also a record high since the collapse of the Soviet Union. The data showed Russia’s so-called small producers, mostly privately held, increased their output by 11 percent to just over 1 million barrels per day. Crude oil exports via state monopoly Transneft fell 5 percent to 195.5 million tonnes due to rising domestic demand and refinery runs. Exports to China reached a new high of 22.6 million tonnes (452,000 bpd), up 43 percent on the year as Russia seeks to diversify its energy customers. Russian producers capitalized on rising oil prices in the first half of 2014, when they reached over $113 per […]

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Russia Pumps Most Oil Since Soviet Era With Sanctions Yet

Russian oil production rose to a post-Soviet record last month, showing how pumping of the nation’s biggest source of revenue has so far been unaffected by U.S. and European sanctions or a price collapse for the commodity. The nation increased output 0.3 percent to 10.667 million barrels a day, according to preliminary data today e-mailed today by CDU-TEK, part of the Energy Ministry. The figure is for crude and condensates, an ultralight oil that yields a greater proportion of high-value fuels. Production averaged 10.58 million barrels a day for 2014, also a post-Soviet record. The U.S. and the European Union imposed sanctions against Russia last year in response to the country’s annexation of Crimea and what they say was support for separatists in eastern Ukraine. Measures included targeting the country’s energy sector by banning exports of some equipment and technology. Russia gets about half of its revenue from oil […]

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Peak Oil from the Demand Side: A Prophetic New Model

Peak Oil from the Demand Side: A Prophetic New Model This is a Guest post by Avery Morrow Avery Morrow’s Internet Fancy The most attention-grabbing attempts to predict oil futures have come from geologists and environmental activists, who tend to look solely at production. An overlooked doctoral thesis by Christophe McGlade, Uncertainties in the outlook for oil and gas , in contrast, focuses on how both supply and demand might be constrained in the coming decades. Peak oil researchers should take note of McGlade’s thesis because he predicted, in November 2013, that oil prices would sink, and that they will stay low throughout the second half of this decade. I found this paper on Google Scholar and have no connection with the author, but I appreciate his careful consideration of peak oil arguments, and his ability to distance himself from the more narrow-minded aspects of both economic and geological thinking. […]

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Low Oil Prices in the New Year Are Screwing Petrostates

Low Oil Prices in the New Year Are Screwing Petrostates thumbnail Low oil prices in 2015 could spark an economic revival in the United States while impoverishing Russians, Venezuelans, and other petrostate citizens. The New Year starts with oil prices at their lowest since 2009. This week they dropped around $1, to $53.11 for West Texas crude and $56.75 for Brent traded in London. Oil prices have plunged partly because of the shale boom in the United States, the biggest oil importer in the world. Fracking has opened massive new supplies of oil in places like North Dakota, where drillers can’t find enough roughnecks to hire. Diminished demand from Europe and China, where economic growth has slowed, is also helping to suppress prices. Saudi Arabia, the world’s biggest oil exporter, has meanwhile maintained a steady flow of oil, even as the price has fallen by around 50 percent since […]

Posted On : Published By : Tom Whipple