Tag Archives: oil prices

Perry to Texas: don’t panic over oil prices

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Rick Perry is mighty proud of the economic record he takes credit for building in the state he governed longer than anyone else in Texas history.

The former governor says Texans shouldn’t panic over the plummeting price of oil. West Texas crude now sits at about $32 per barrel.

The state’s diversification will help the state weather this economic storm, Perry said, citing what he called the “Texas miracle.”

I get that Perry wants to assure Texans that we’re going to be all right, unlike an earlier oil price crash that all but killed the state in the late 1980s.

Let’s get real here. The state still relies heavily on oil and natural gas to help fund state government at many levels.

Comptroller Glenn Hegar has been accused of offering what used to be called a “rosy scenario” with regard to the revenue the next Legislature will have when it convenes in January 2017. Perry is on the comptroller’s side.

Yes, the state has diversified significantly over the past 30 years. Amarillo and the Panhandle suffered grievously back then when the bottom fell out of the oil market. I was in Beaumont when it happened and witnessed the wholesale shutdown of petrochemical plants. That crash hurt. A lot.

Will this crash bring as much pain as the previous one? Probably not.

Amarillo’s burgeoning medical community will head off some of the misery. So will its growing service-sector economy. Pantex remains a top job provider.

Let’s not dismiss the pain and suffering that will befall public school systems — as well as public colleges and universities — that rely on funds generated by oil and natural gas royalties.

Gov. Perry says he knows what an economic downturn looks like.

The one that might be coming to Texas won’t look exactly like the previous one, but it’ll bring its share of hurt to Texans.

 

Fuel price goes down; fares stay up

boom

This might be one of the more unsurprising back stories of the recent news regarding the falling price of fossil fuel.

Air fares — which shot up right along with the price of those fuels back in 2010 and 2011 — are staying right where they’ve been, even while the price of fuel falls through the floor.

Who knew?

Profitability matters.

I get that air carriers want to preserve their profit margins. But can’t they do so while providing a little bit of relief for those who want to fly somewhere?

It’s a bit like the gasoline dealers who fairly routinely jack the price of fuel up a dime, 12 or 15 cents at one pop when the price of oil ticks up — as it did near the end of last week; I’m waiting now for the gasoline price to reflect the increase.

When the prices of oil comes down, the dealers seek to maintain their own profit margins for as long as they can by inching the price of gas downward a penny or maybe two at a time.

I understand basic economics as much as the next guy. It just is a bit frustrating — as a potential consumer — to wait for air fares to decline at the same pace that they escalate.

 

Keystone decision makes sense

Keystone-Pipeline

Politicians’ positions can “evolve,” yes?

That means bloggers can change their mind, too, I reckon.

So it has happened with the Keystone XL pipeline. I once blogged in support of the notion of running the pipeline from Canada, through the heart of the Great Plains to the Texas coast.

The price of gasoline was skyrocketing. We needed some way to put more fossil fuel into the international market, I said back then.

What has happened? Jobs came back. Oil prices fell sharply. So did the price of gasoline.

The need for the pipeline? Well, it’s no longer compelling.

President Obama said “no” to the pipeline this week. The fallout has been reduced significantly because of economic and environmental factors that have turned in our nation’s favor.

I now believe the president’s rejection of Keystone makes sense.

The president nixed Keystone because it wouldn’t help the U.S. consumer market, given that the oil would be refined here and then shipped offshore to … wherever.

Plus, there is that environmental concern about possible spillage and leaks from a pipeline that would coarse through nearly 2,000 miles of U.S. territory. Those things do happen, you know. The damage is significant.

Oh, and the jobs it would create? They now appear to have been minimized because private-sector job creation has been heating up nicely over the course of the past half-dozen years.

So, good bye to Keystone.

Sure, our Canadian friends are unhappy. So are some refiners on the Texas Gulf Coast.

The rest of us? Well, I think we’ll be all right without building the Keystone XL.

 

Obama got the blame … where’s the credit?

oil prices

Let’s flash back to around 2010.

Oil prices were spiking. They surpassed $100 per barrel of crude. The price of gasoline also skyrocketed. It passed $4 per gallon in some parts of the country; it got nearly that high in the Texas Panhandle.

Who got the blame? President Barack H. Obama. His congressional critics, namely the Republicans, kept hammering the president over the price spikes. Why, they just couldn’t stomach the idea of watching these gas prices heading into the stratosphere and they had to blame someone. Obama was the target.

Then something happened.

Automakers began making more fuel-efficient cars after they were bailed out partly with federal government stimulus money. Research on alternative energy sources ramped up. Other oil-producing nations’ economies began to falter, diminishing demand on fossil fuels around the world.

The price of oil today is less than $40 per barrel, less than half of where it was five years ago. The price of gasoline? Today in Amarillo, regular unleaded is being pumped at $2.26 per gallon in most stations.

Is the president getting the “blame,” let alone the credit, for any of this?

Not on your life.

How come?

 

Gasoline projected to drop … then it spikes up!

No sooner than I finished reading reports about projected steep declines in the price of gasoline in the United States …

Then the price of unleaded regular gas spikes up 15 cents overnight in little ol’ Amarillo, right here in the heart of the Oil and Natural Gas Patch.

What gives with that?

One of the reports I read said the price decline can be attributed to a number of factors:

* Automakers are making more fuel-efficient cars. My wife and I are driving one now, a Toyota Prius. We’re doing our part.

* There’s a glut of higher-quality gasoline that needs to be used up. Once that supply is gone, then refiners are going to start turning out lower-grade gasoline, which will sell for less than the better quality go-juice.

* Alternative energy sources are becoming more of the norm across the country. The wind and the sun are heating and cooling more homes, although Texas — one of the sunnier places in the country — needs to get more involved in the solar energy game.

I always have trouble trying to figure out the gasoline pricing structure in Amarillo and the Panhandle. A friend who owns a chain of convenience store/gas stations has tried to explain it to me. It has something to do with the price he pays wholesalers for the gasoline he sells at his stations.

I’ll admit, though, to being annoyed when I read about consumer price projections — only to watch the price of the commodity at issue going in the other direction.

I guess I just need to settle down.

 

 

Iran nuke deal makes economic sense

Oil prices could drop by as much as $15 per barrel of crude if the Iran nuclear agreement becomes final.

Who knew this agreement could be beneficial to our pocketbooks?

This bit of news comes from the Energy Information Administration and it portends even greater savings for American motorists — such as yours truly — who are continually looking for more disposable income.

http://www.msn.com/en-us/money/markets/iran-nuclear-deal-seen-cutting-oil-prices-by-dollar15-a-barrel/ar-AAayCbt

“If a comprehensive agreement that results in the lifting of Iranian oil-related sanctions is reached, then this could significantly change the … forecast for oil supply, demand, and prices,” the EIA said in a report. “However, the timing and order that sanctions could be suspended is uncertain.”

The key, of course, is the sanctions issue. Iran has a good bit of oil. The sanctions imposed by much of the world have prevented Iran from pumping and selling oil around the world. Suppose the sanctions are lifted and Iran returns to the energy-producing community of nations, thus putting more oil on the market.

Whether the sanctions get lifted in a timely manner could have an impact on the price of crude oil worldwide. The lifting of those sanctions, of course, depend entirely on Iran’s ability to comply with the agreement announced April 2 by the United States and its negotiating partners.

The framework agreement reduces Iran’s nuclear production capability significantly, with the intent of prevent the rogue nation from producing a nuclear bomb — which it has all but threatened to use against Israel. The Israelis, naturally, take those threats quite seriously — and those threats have contributed to Israel’s outright opposition to any deal with Iran.

Let us not forget that delays could come from the U.S. Congress, which comprises members who act as though they’d rather bomb Iran than talk to it.

The deal needs a chance to work. If it does, then one leading energy agency thinks oil consumers all around the world are going to reap some benefit.

Higher gas price = safer highways

Here’s a thought that perhaps didn’t cross your mind; I didn’t think of it.

It’s the idea that skyrocketing gasoline prices slow drivers down, make them think about quick starts and stops and keep them more alert on our streets and highways. Yes, they conserve fuel by driving more slowly while starting and stopping with more care — but they also make the streets and highways safer for everyone else.

A discussion on this topic occurred this morning on National Public Radio.

The interview discussed the plummeting gasoline prices and what it might do to drivers’ awareness of the need to conserve fuel. Accordingly, if drivers no longer are as concerned about fuel economy, they likely might drive more quickly and revert to relatively hazardous driving habits — which, therefore, make our public thoroughfares more dangerous.

Wow! None of this ever occurred to me.

Gasoline in Amarillo as of this morning is down to $1.87 per gallon of unleaded regular; diesel is down to around $2.85 per gallon. None of this really means I’m about to go speeding around the city with nary a care in the world. I trust it won’t do the same to others, although still others might throw caution to the wind and push the pedal to the metal.

Energy analysts tell us the price of oil is continuing to fall and will keep falling for the foreseeable future. It’s below 50 bucks a barrel as of this morning.

I’m not one to want to pay more for a product I consider essential to my existence.

Therefore, I’ll settle for paying less for gas — and hope that my fellow motorists will continue to observe safer driving habits.

 

Oil price plunge: Good for U.S., bad for Texas

It’s become almost a truism that Texas marches to a different cadence than much of the rest of the country.

Take the plunging price of oil and gasoline. Millions upon million of Americans are cheering the good news, that they’re paying less for gas than they were yesterday, let alone a year ago. Meanwhile, Texas oil producers are crying the blues.

And then we have Texas government, which is likely now to face a serious shortfall in revenue derived from oil that’s pulled out of the ground in, say, the Permian Basin and along the Caprock here in the Panhandle.

http://www.texastribune.org/2014/12/19/oil-prices-could-dampen-legislative-session/

What’s good for the rest of the county isn’t necessarily so for Texas. What to do?

Given that I don’t have a particular dog in this hunt — in the form of oil holdings that pay handsome royalties — I’m more than happy to see the price of gas continue to slide downward. It’s at $1.98 per gallon in Amarillo as of right now; it’s subject to change any moment.

The Texas Tribune link attached to this post notes that the state’s new comptroller, Glenn Hager, is facing a tough baptism in state government. He’ll have to produce some revenue forecasts for the next Legislature. At the rate the price of oil is falling, it’s becoming a bit problematic for the comptroller-elect to project anything for the next week, let alone for the next two years.

Gov.-elect Greg Abbott has proposed an ambitious start for his administration that will depend on money. Highway improvements? The amount of that money will depend on oil prices. Public education? Again, the state derives royalty money from oil and natural gas to help pay for public school.

So, while the rest of the country hails the falling price of oil and gasoline, lawmakers and statewide elected officials in Texas, which produces so much of it, are wringing their hands.

Yep, as the promotional slogan goes: Texas is like a whole other country.

 

Gas-price skid causes nervousness

So-called “experts” on energy prices and policies keep telling us the same thing.

The downward spiral in oil and gasoline prices is going to continue perhaps well into the new year.

But watching the price ticking down — often more than once daily — continues to make me nervous.

The price of unleaded gas has now dipped to less than $2 per gallon in Amarillo. I work part time across the street from a leading gas dealer here and I’ve seen the sign tick down as many as three times during a single day.

How low will it go?

The experts aren’t saying yet how cheap they think gas will get.

Supply is up. Demand is down. American drillers keep producing oil like there’s no tomorrow. But everyone knows how free-market economics works: If the supply keeps outstripping demand, eventually the suppliers will scale back their production to even out the inventory of oil and gasoline on the market. The result inevitably increases the price of gas a the pump.

As we’ve all seen for the past several years, gasoline increases in price at a far quicker pace than it decreases.

Hey, I’m not predicting gloom and doom at the pump.

I’m merely suggesting that I’m getting quite used to paying the same amount for gas that I was paying five years ago or longer.

The “new normal” in gas prices had produced a certain form of numbness to the prices we were paying. Now that new normal has been shaken — but in a positive sort of way.

It still makes me nervous about what could be coming down the road.

 

Declining oil prices bad for economy?

Economics isn’t my specialty. Indeed, I don’t have any specialties.

I’m trying to understand why some economists now think the declining price of oil and the concurrent drop in gasoline prices is somehow bad for the recovering U.S. economy.

http://www.msn.com/en-us/money/other/is-dollar40-oil-coming/ar-BBgNjHn

Does anyone else remember when crude prices were skyrocketing from, say, $40 per barrel to more than $100? The stock market went bonkers. Investment accounts were drained of billions of dollars.

However, the oil industry made a gigantic comeback. NPR this morning did a story from West Texas detailing how pump jacks that once stood like dinosaurs have jumped back to life and are pulling out of the ground.

A lot of other factors have contributed to the nation’s economic rebound.

Moreover, a lot of factors are contributing to the glut of oil that’s driving its price downward.

Now we hear that the economic recovery might be jeopardized by the plunge in oil prices.

The oil boom might fizzle out at the production end, but what about the increase in disposable income for motorists who aren’t pouring as much money into their fuel tanks?

Will they be able to spend more of that income on other essential — and non-essential — items?

Economics can be a complicated issue. This oil price up-down cycle has me confused.