I never expected gas prices to stay as low as they were a couple of years back. No way the US can produce profitably at ~30 /bbl.
Here in PA it’s starting to drift above $3.00 a gallon for regular. PA sucks because our Republican former governor pushed through a huge tax increase on gas.
He didn’t want a severance tax on natural gas. That went belly up for a while here too when the prices were too low. Looks like it is starting to pick up again. Seeing lots of Texas/OK/LA plates around here again.
Keep in mind, I’m an upstream (drilling and completions) guy, not a midstream (pipeline and transportation) or downstream (refining) guy, but through things I read, usually from people that are in my network on LinkedIn, I keep at least an ear as to whats happening with mid and downstream.
From what I’ve read, Permian pipeline will reach “takeaway”, as in full capacity probably in a few months. The earliest I’ve read that any new pipelines will be constructed won’t start until until early 2019.
Yeah, they were discussing exactly that, lackof pipeline and refining capacity and the Permian Basin and foreign refineries refining our gas for us , this morning on bloomberg (financial) tv.
I am predisposed to blame"liberals" for all the bottlenecks, but, while Im sure bottlenecks are driving prices up it could also be
over speculatiin
private property rights vs eminent domain
state’s rights to oppose fed’l energy policy
the koch brothers
etc. etc.
IOW as much as I am sure of the solution, (end bottlenecks, expand pipeline and refinery capacity), I’m really just guessing when I say “liberals” are causing the bottlenecks.
Gulf Coast refineries struggle with light sweet crude like you get from W. Texas, they’re built for heavy sour. That’s why they’re exported for refining.
Your real enemy is the free market. The Wolfcamp and Spraberry trends in W. Texas are relatively new plays, and they didn’t start to come online hard until oil prices started collapsing 4-5 years ago.
Oddly enough, the free market is a little shy on billion dollar CAPEX projects with commodities that are in the tank.
The “no new refineries” thing is sooooo 2004. You yourself posted how much refinery capacity has increased, with “no new refineries”. Refining is a process that unless you’re running at 90+% capacity, you’re losing your ass in a necessary evil, thin margin business. When there start to be spot shortages of gas and refined petroleum products in markets, then the markets will have determined additional refinery capacity is needed and it will be added.
CNN says that since 1976 demand for gasoline has increased considerably US no new refineries have been built in the US and US output has flatlined.
…Nothing really happens. Next year, repeat story.
So why hasn’t a new refinery been built in the U.S. since 1976?
“There have been calls every year this decade for new refining capacity, yet no new projects initiated,” said Geoff Sundstrom, a spokesman for AAA, the motorist organization. “Refining capacity has not kept pace with demand for gasoline.”…
…In 1995 American drivers burned about 17 million more gallons of gasoline a day than the country produced…
By 2005, the latest figures available, the gap had widened considerably to about 36 million.
Not the definition I would have used,
although, it may just be CHEAPER to refine oil into gasoline etc. in Canada and Mexico and import the gasoline.
But then why would CNN title an article "Behind high gas prices: The refinery crunch" ?
I didn’t get the idea from CNN. Probably from some righty contributor on a FOXNews show like Hannity (and Colmes.)
and that is probably where I got the idea to blame lefties.
One thing I DEFINITELY did not know is that there are different pipelines for different types of crude.
I’m not sure that matters much tho. If West Texas produces one type if crude it needs one type of pipeline. If it produces two types of crude, it needs two types.
A gallon of crude weighs 7.21 lbs (I hadda look it up ), so a barrel weighs 302 lbs.
No matter what economies of scale, more pipelines, cheaper pipelines, cheaper oil tankers, etc. we invent or use, it’s prolly gonna cost a lot to move 302 lbs from the Arctic circle, Venezuela, etc. etc. to American urban centers.
Hiring has recovered somewhat, but I still hear a lot of complaining from people trying to find work. During the downturn, “efficiencies” were the name of the game and a lot of jobs on a rig were automated. There also seems to be a 50 year old age cap, I know some very qualified pet. engineers who can’t even get a sniff and they’re convinced it’s because of ageism. But by and large there are a lot more jobs out there for sure.
Oil prices are definitely on the move up this week.
Numerous things in play.
Drawdowns from US reserves were heavier than expected on strong US exports. Production in states like Canada, Venezuela, Libya, and Kazakhstan are down, some of them unexpectedly (Canada had technical issues, a blown transformer at a syncrude facility that cut 350K barrels a day).
The thing that seems to have everybody freaking out though is the US threats to its allies to be shut out of the US banking system if they purchase Iranian oil after November 4th. That’s two million barrels a day that will have to be replaced.
OPEC just pledged to increase production by a million barrels a day, most analysts seem to think that will be more like 700K barrels/day increase.
Don’t be surprised if oil goes nuts this summer, and yeah I know, I’ve been saying oil prices aren’t going to skyrocket without an unforeseen oil shock. Well, the Trump administrations zero tolerance sanction against Iran is looking like it’s going to be that oil shock. I’d expect a release from the SPR before November depending on what oil prices do, but no US allies are expected to get waivers and their governments can’t protect anybody who buys Iranian oil and then has no place to sell it. Nobody is going to take a chance of being locked out of the US banking system.
), so a barrel weighs 302 lbs.