Crude Oil Bear Market

perfect opportunity for me to get about 10k off a new prime.

 

And the stock market is going to crash... at some time between later this year and 20 years from now.
As a nationwide average, we won't see $1 gas until demand falls through the floor. Half the oil we use is for non-transportation uses.
So even if gasoline stopped being used, $1 oil is a stretch.
Once carbon pricing is started up, that is pretty much the end of $1 gas ever being a possibility. I'm guessing that will happen within 2-7 years.

 

Did he predict the $20 oil that didn't happen? Yes he did: "My earlier forecast of a bottom oil price of $10 to $20 per barrel -- the marginal cost of production in efficient locales -- still seems valid."

The oil patch has been in a bear market since September 2014 and I believe we've hit a bottom.

I don't believe his correlation theory. How many index highs have been made in these almost 3 years? Do you remember the "experts" saying oil would recover then climb with a vengeance by 2016? Then the cry was "lower for longer..."

From CNN May 31:
Saudi Aramco, the kingdom's state-owned oil behemoth, took 100% control of the sprawling Port Arthur refinery in Texas on Monday, completing a deal that was first announced last year.

Port Arthur is considered the crown jewel of the US refinery system. The Gulf Coast facility can process 600,000 barrels of oil per day, making it the largest refinery in North America.

Aramco previously owned 50% of Port Arthur through a joint venture co-owned with Royal Dutch Shell (RDSA) called Motiva Enterprises.

But the two oil giants had a rocky relationship and reached a deal in March 2016 to separate their assets. Shell put out a statement on Monday confirming the "completion" of that break-up.

In addition to Port Arthur, Aramco is acquiring full ownership of 24 distribution terminals. Aramco also gets the exclusive right to sell Shell-branded gasoline and diesel in Georgia, North Carolina, South Carolina, Virginia, Maryland, the eastern half of Texas and the majority of Florida.

Aramco's deal allows the oil giant to shore up one of its best customers -- the US -- ahead of next year's planned IPO. Now that it controls the largest American refinery, Aramco can send more Saudi crude into the US for refining to sell to North American drivers.

Saudi Arabia is already America's second-largest source of crude, behind only Canada. The US imported 1.3 million barrels of Saudi crude a day in February, up 32% from last year, according to the Energy Information Administration.

My bottom may have been a bit too high. A lot can happen in a week so I won't have an answer until Friday night.

 

Don't forget that in the Continental 48 states, combined federal and state excise tax is $0.35 to 0.76/gallon, so getting the total pump price down to $1.00 will be a very steep order.

In Alaska, those taxes leave more room at $0.3065, but I don't ever expect Alaska to have the cheapest anything.

 

This all depends on whether the production of tight oil from shale can continue. I know overall production is going up, but production per well is dropping. So we have to continually drill new wells to keep up production. Eventually, the cost of of making those new wells will force up the production cost.

Then the low oil price means the oil companies invest less in prospecting. With less potential new sources for crude on hand, an event that disrupts the supply will lead to even larger price increases. It's not unlike what GM went through with the price spike in 2008 by not having any fuel efficient models available.

 

if we knew the answer, we'd all be rich.