American Thinker: Two of many things to be grateful for today are that:
1. America’s oil companies are creating, in Bloomberg’s headline, “OPEC’s worst nightmare,” and
2. Barack Obama is no longer in office and able to prevent them from liberating us from dependence on hostile powers for our energy.
Those who have driven any distance to celebrate Thanksgiving realize that oil prices are dramatically down, and, while there will be fluctuations ahead, the outlook is positive for dramatically increased American oil production. Via Bloomberg, we learn that the Permian Basin in Texas alone is set to disturb sleep in Caracas, Tehran, and Moscow:
In Houston, the U.S. oil capital, shale executives are trying out different superlatives to describe what’s coming. “Tsunami,” they call it. A “flooding of Biblical proportions” and “onslaught of supply” are phrases that get tossed around. Take the hyperbolic industry talk with a pinch of salt, but certainly the American oil industry, particularly in the Permian, has raised a buzz loud enough to keep OPEC awake.
“You’ve got an awful lot of production that can come in very economically,” said Patricia Yarrington, Chevron Corp.’s chief financial officer. “If you think back four or five years ago, when we didn’t really understand what shale could do, the marginal barrel was priced much higher than what we think the marginal barrel is priced today.” …
August saw the largest annual increase in U.S. oil production in 98 years, according to government data. The American energy industry added, in crude and other oil liquids, nearly 3 million barrels, roughly the equivalent of what Kuwait pumps, than it did in the same month last year. Total output of 15.9 million barrels a day was more than Russia or Saudi Arabia.
By the way, “shale” refers to oil liberated via “fracking.”
Bloomberg correctly points out that not only oil production, but pipeline infrastructure to get it to market is being put in place. These massive investments can pay off because fracking technology has improved so drastically that even at low oil prices (as low as OPEC can tolerate), production and distribution is profitable. more here
This is, of course, absolutely correct.
Obama worked hand in glove with the Saudis to attempt to drive our frackers out of business and keep gas prices artificially high in order to make the alternative fuels look more attractive. Like ludicrously expensive biofuel for warships.
And, this is in spite off the roadblocks leftwing judges are still throwing up related to Keystone and the pipeline bottlenecking in Texas that will not be resolved until some time in 2019-2020.
We need more people driving gas guzzling pickup trucks to increase demand.
Not only have the rules of the game changed, but there’s not going to be much OPEC can do about it without cutting their own profits.
Sweet!
When fuel gets cheaper the dems just raise the tax per gallon anyway. That is where most of the cost is in the first place.
Energy states are looking at full employment. And not because of Starbucks.
Oil futures are currently $51.14/barrel as I type, and the national average for gas is (I think) $2.58/gal. That’s GREAT news for the consumer, especially going into the gift buying season.
Only drawback is, at the current futures price, a lot of frackers will cap their wells until the price goes back up, which is bad news for the people working in the fields. But I think we should be able to find a happy medium. I heard this morning that a $60/bbl price is what’s needed for the frackers to make money. So we should be able to keep the price of gas under 3 bucks.
Many can break even in the low $30s. If the price falls below $50, then some might start capping.
Let Iranian sanctions take full effect, quit issuing exceptions to them and some other BS pop off in the Middle East and all is well. There was that unexpected rise in inventories last month.
Which is why demand needs to stay high. If they think the economy is cooling off (read: more fallout from high interest rates from the Fed and the promises of two more increases) then the bears will come out of hibernation.
OTOH, if we have a super cold winter like the Farmers Almanac predicted then that could stabilize things until spring. Either way, I saw unleaded for $2.06 last night. Lowest I’ve seen in years.
But all of this is just a death knell for offshore in the Gulf of Mexico. You can’t run those rigs, pilotboats, OSVs and support those Alabama and Louisiana shipyards with oil under $60-70. Some speculated that might come back by 2020 but if things continue then that is going to hurt all of those people.
But then, the environ-mentally ill on the Left should rejoice. You don’t have to worry about Deepwater Horizons and wiping crude off a seagull if we don’t have to drill deepwater to get to it.