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Oil prices expected to drop? "Expect $50 oil, but not $2 gas"
Posted on 7/15/13 at 8:59 am
Posted on 7/15/13 at 8:59 am
quote:
Expect $50 oil, but not $2 gas, Gulf Oil CEO says
July 15, 2013
By: Matthew J. Belvedere | Producer, CNBC's "Squawk Box"
Oil prices should be about half of today's $105 a barrel by the end of the year, Gulf Oil CEO Joe Petrowski predicted on CNBC on Monday.
He stressed on "Squawk Box" that this trend is mostly on the supply side because record amounts of oil and natural gas are being produced in the United States and in Canada and OPEC supplies are higher.
But "$50 [a barrel] oil does not translate into $2 gasoline," he said, because it still has to be refined and transported.
In the past three months, the price of oil has risen 20 percent. And that's pushed gas prices up 14 cents in the past week alone to $3.613, according to AAA's Daily Fuel Gauge Report.
Article continues at link: LINK
How likely is $50/bbl oil and what kind of toll would that take on the Louisiana economy?
An article from May of this year:
quote:Article continues at link: LINK
Oil Price Forecast for 2013-2014: Falling Prices
Forbes
Bill Conerly, Contributor
Oil prices are headed down, and I mean down at least $20 a barrel. The key reason is that prices have been high. It’s not a paradox, but a result of the long time lags in oil production.
Oil prices were fairly stable from 1986 through 2001, averaging just $20 per barrel. Then prices started rising, spiking to $134 just as the recession began. The price of oil has been above $80 for the past two and a half years. With rising prices has come a dramatic increase in exploration activity. During the era of low prices, the number of drilling rigs in operation around the world was 1,900 on average; now we are at nearly double that pace, and we have been for nearly three years.
______
What of demand? Demand should grow a little slower than the global economy. Unless the world starts to boom—an unlikely scenario, given problems in Europe and the United States—production capacity will grow faster than demand, pulling prices down.
Even if it doesn't translate into a 50% reduction in fuel costs, my industry will see major savings in shipping.
What is the money board's opinion on this? Is this really 100% supply side or is lagging demand a bigger factor at play? If lagging demand, does that indicate slow or stagnant economic growth?
This post was edited on 7/15/13 at 9:13 am
6
Posted on 7/15/13 at 9:00 am to dewster
gas is like 20 cents up in the last 2 days around my area
Posted on 7/15/13 at 9:04 am to dewster
Isn't like 55% of the cost of a gallon of gas excise tax? I know gas is one of the most taxed consumables in America. Cigarettes are 78% tax.
Posted on 7/15/13 at 9:09 am to Vols&Shaft83
quote:
Isn't like 55% of the cost of a gallon of gas excise tax?
Not sure about that. I did read an article recently that indicated that the average tax rate for a gallon of gasoline was higher than the average profit realized per gallon though.
Posted on 7/15/13 at 9:18 am to dewster
quote:
Not sure about that. I did read an article recently that indicated that the average tax rate for a gallon of gasoline was higher than the average profit realized per gallon though.
The tax definitely exceeds the profit, that much I do know. The BigFella probably knows more about this subject than anyone on this board, hope he weighs in here.
Posted on 7/15/13 at 9:19 am to dewster
Double post.
This post was edited on 7/15/13 at 9:20 am
Posted on 7/15/13 at 9:25 am to jimbeam
quote:
gas is like 20 cents up in the last 2 days around my area
Bush's fault.
/Poli Board hijack....
Posted on 7/15/13 at 9:33 am to dewster
American's have gotten comfortable with $3.50 gas and consider that a "good deal". When Bush was in office the outrage of gas prices was daily, now all you hear are crickets.
Posted on 7/15/13 at 9:36 am to kywildcatfanone
Thanks Obama.
Posted on 7/15/13 at 9:38 am to jimbeam
Taxes are only 39 cents/gallon here in Texas. So the $3.49 price you see is actually bought by me for $2.92 today and I'm making .18 + .39 federal and state taxes....so yes the government makes twice as much as me per gallon with none of the investment involved.
now that is good business practice!
now that is good business practice!
Posted on 7/15/13 at 9:40 am to ThaBigFella
quote::|
so yes the government makes twice as much as me per gallon with none of the investment involved.
Posted on 7/15/13 at 9:43 am to ThaBigFella
You should be happy the gov't is allowing you to keep that much.
quote:
/Poli Board hijack....
Posted on 7/15/13 at 9:44 am to dewster
It's hard to see where massive amount of new supplies can come from with $50 a barrel oil. All the tight oil, shale oil, deepwater oil, and oil sands projects require higher oil prices to make them economical. With the middle east supplies hinging on the ability of Saudi Arabia to produce higher quantities it looks like cheap oil is becoming harder and harder to find. Even the Saudis are being forced to run much higher rig counts and are looking at lower gravity more expensive crudes to increase production.
This post was edited on 7/15/13 at 9:49 am
Posted on 7/15/13 at 9:45 am to jimbeam
jim beam....just be thankful we're not europe yet. I paid $12/gallon in Nice a few summers back. Our taxes are still relatively cheap but it seems obama likes the european way of government and wants us headed down that path. I don't know what will happen if gas gets that pricey here, you can't exactly walk place to place in Dallas like you could in a place like Nice.
Posted on 7/15/13 at 10:06 am to ThaBigFella
quote:
Taxes are only 39 cents/gallon here in Texas. So the $3.49 price you see is actually bought by me for $2.92 today and I'm making .18 + .39 federal and state taxes....so yes the government makes twice as much as me per gallon with none of the investment involved. now that is good business practice!
But how much of that $2.92 is tax?
Posted on 7/15/13 at 10:09 am to TigerDog83
quote:
All the tight oil, shale oil, deepwater oil, and oil sands projects require higher oil prices to make them economical.
This was my understanding as well. The shale plays will be less viable than before.
The Tuscaloosa Marine Shale is kind of slow right now, right? I doubt we'll see it continue at $50/bbl.
This post was edited on 7/15/13 at 10:11 am
Posted on 7/15/13 at 10:18 am to dewster
I've been calling for huge declines in oil prices for a while. Instability in ME and Africa are keeping the price inflated. Who knows if that will keep up. Iraq has very cheap oil coming into play that will really drive prices lower IMO.
Posted on 7/15/13 at 10:20 am to dewster
It has basically been alluded to already, but I thought all the (more expensive) exploration and production was mostly due to companies trying to cash in on the higher prices. Start to lower the price and the more expensive processes become less economical leading to less production and lower supply. Then the price rebounds (ETA: due to speculation). I would be shocked to see the price go back under $90 without another recession.
This post was edited on 7/15/13 at 10:22 am
Posted on 7/15/13 at 10:35 am to ell_13
quote:
But how much of that $2.92 is tax?
What do you mean?
$2.92/gallon - cost
$.18/gallon - profit
$.39/gallon - tax
$3.49/gallon - price
I collect the taxes and they're deducted from my merchant payout once every 2 weeks......but as an aside I do see today's coming shipment is at $3.16 so the price will be $3.75 or so a hefty increase.
This post was edited on 7/15/13 at 10:38 am
Posted on 7/15/13 at 10:38 am to ell_13
quote:
I would be shocked to see the price go back under $90 without another recession.
It got below $90 in April of this year. But I agree, I cant see oil going below $80/barrel.
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