Tag Archives: shale oil

'Gas war' takes on new meaning

Do you remember when the term “gas war” referred to competing service stations at intersections dropping their prices to lure customers away from the station across the street?

I read recently something like that happened in Oklahoma City, dropping the price of gasoline to less than $2 per gallon.

Good deal, right?

Well, the term has taken on a more global meaning. The energy price war is causing serious declines in the price of gasoline in the United States. It dropped to $2.15 per gallon today in Amarillo and it’s likely to drop even more. Heck, it might have dropped another penny or two since I got home today a little after noon.


OPEC recently refused to cut production. The supply of crude oil remains quite high, while demand is declining. Add to that the surging U.S. energy production, which is about to make the United States the world’s largest producer of petroleum in the world, surpassing Saudi Arabia as No. 1.

We can thank (or blame) the fracking that’s going on in West Texas and in North Dakota and Montana, which are seeing a huge boom in the production of shale oil.

Although I am acutely aware that the decline in oil makes it more difficult for producers to keep pumping it out of the ground, I also am grateful to be┬ápaying a dollar or more less for gasoline than I was paying a year ago. It’s freeing up some disposable income in our house.

Someone will have to tell more once again why this oil price decline somehow is bad news.

Well? Anyone?


Don't bet on OPEC

It’s gratifying to me to see the United States and Canada standing up to other oil-producing regions in the ongoing battle to control the price of fossil fuel.

According to an analysis on MSN.com, the North Americans are winning the fight.


The Organization of Petroleum Exporting Countries recently declined the opportunity to reduce production. The non-action sent Brent crude to new low prices. According to MSN: “The Saudis appear to be spoiling for a fight, trying to find out exactly how cheap oil must be to force surging U.S. shale-oil production to seize up like an unlubricated engine.”

The gratification comes in the knowledge that North Americans finally seem to understand the need to conserve energy and to use alternative sources of energy. Yes, the production of shale oil in North Dakota and Montana also is helping boost oil supplies that have been outstripping demand; the result has been the plummeting prices we’ve seen across the country.

Shale oil is less expensive to produce than when it first came onto the oil-production scene, according to MSN.

Add the falling production costs of shale oil and the growing use of alternative sources — wind, sunlight and hydropower, to name just three — then OPEC’s influence on world oil price becomes diminished.

We’ve come a good distance from the days of the Arab Oil Embargo, correct?


Energy still drives economy

An interesting survey popped up on MSN.com that showed the cities with the five best economies in the United States.

Of the five, four of them have something in common: oil.

The energy-related economies that made the top five are: Midland and Odessa, Texas, Fargo, N.D., and Sioux Falls, S.D. Midland and Odessa ranked Nos. 1 and 2, respectively. The third-best local economy belongs to Pascagoula, Miss.


This is an interesting development in that Midland and Odessa experienced tremendous booms in the 1970s when the price of oil “skyrocketed” to what then was considered a huge price for a barrel of oil: about $40 and change. Midland built skyscrapers downtown, creating a skyline in a city of about 80,000 that would become the envy of city planners in much-larger communities. Those gleaming, tall buildings would go dark in the 1980s as the price of oil collapsed and companies declared bankruptcy.

I was living in Beaumont at the time and watched petrochemical plants lay off thousands of employees as the demand for their products fell precipitously.

The cycle is repeating itself now in the Permian Basin and way up yonder in the Dakotas, where communities are being remade into something no one recognizes as drilling contractors pour into the region to explore for shale oil buried in what’s believed to be the largest petroleum reserve on the planet.

Let’s wish them luck during these boom times. They might need plenty of it if the oil economy collapses yet again — which could happen.

Those who’ve lived through some of these cycles before understand full well about the nature of that particular industry.

A word of caution: Start planning for some serious economic diversification.