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Page added on August 31, 2015

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Take advantage of cheaper oil and gas

Consumption

Lower prices at the gasoline pump and in utility bills puts more money in everyone’s pocket, which boosts spending and the overall commerce. Considering the slow pace of America’s economic recovery, the market needs all the help it can get.

The drop in the world price of oil is due to several factors related to supply and demand. One is that the demand from China, which had been strong, is now lagging, a result of its own economic slowdown. Another factor is that the big producers, including Saudi Arabia and now the United States, have not reduced production, for different reasons.

The 12-member Organization of Petroleum Exporting Countries, a villain in past decades, has lost much of its punch as individual producers have been unwilling to cut production to influence the world price. Chief among the cartel members is Saudi Arabia, which pushed production to record levels last month to maintain its spending on, among other things, weapons and benefits to its people. The aging monarchy faces threats from various sources, including Islamic radicalism opposed to the ruling family.

In the United States, companies drilling for oil and exploring deep gas deposits made the country a new leader in production. While slipping prices have curbed some new exploration for wells, it has not changed the fact that record U.S. oil extraction has slashed dependency on imports.

The countries that have taken a licking on the world market are smaller producers such as Iran, Iraq, the Persian Gulf states, Nigeria, Russia and Mexico. This week, Venezuela called for an emergency OPEC meeting on the plunging prices.

In the meantime, U.S. drivers, homeowners and businesses should take advantage of the situation. No one knows when prices will turn back up.

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6 Comments on "Take advantage of cheaper oil and gas"

  1. Fat Lady on Mon, 31st Aug 2015 7:23 pm 

    RA RA RA SISK BOOM BA TR LA TRA LA TRA LA!

  2. GregT on Mon, 31st Aug 2015 8:04 pm 

    Oops, too late.

    http://money.cnn.com/2015/08/31/investing/oil-prices-surge-near-50/

  3. Makati1 on Mon, 31st Aug 2015 8:35 pm 

    Sorry, but the facts show that it does NOT increase spending. It seems to be speeding the payoff of debts and increasing the money stuffed under the mattress. No sign that low oil prices have done anything to increase the economy.

  4. apneaman on Mon, 31st Aug 2015 8:37 pm 

    Greg, as a system nears the tipping point it tends to swing to the extremes.

  5. Boat on Mon, 31st Aug 2015 8:56 pm 

    Assuming OPEC production continues at around 31.7 million bpd – its recent three-month average – through 2016, the second half of 2015 will see supply exceeding demand by 1.4 million bpd, testing storage limits worldwide, the IEA said.

    The surplus will drain down to about 850,000 in 2016, with the final three months of 2016 marking the first quarter of a potential stock draw.

    http://www.reuters.com/article/2015/08/12/us-iea-oil-idUSKCN0QH0VB20150812

    Finally a decent report. Anybody know of an opposing report?

    The US still needs 5mbpd in imports.

  6. Kenz300 on Mon, 31st Aug 2015 11:40 pm 

    As the high cost producers go broke one by one…..

    Banks stopped lending…….

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