At least 26 states, including Arkansas and Oklahoma, are paying less than $2 for a gallon of gas, and the national average is the lowest it’s been since 2009.
While low gas prices are viewed largely as good for the consumer on a tight budget, the low oil prices have shuttered thousands of jobs in the United States.
“It’s not good for anybody,” says David Taylor of CrudeFunders.com, a crowd-funding website for oil business investments.
Not even for alternative energy? Nope. Higher gas prices push investment into alternative energies. Lower gas prices have pushed up cars sales and use and taken away incentive to conserve. The average vehicle fuel economy hit record levels in 2013 at 24 miles per gallon.
The U.S. oil rig count fell by 28 rigs last week, its largest weekly increment in nearly three months, according to the latest AAA Fuel Gauge Report. With a batch of experienced oil business professionals out of work and looking for investors, Taylor said “there are still good opportunities out there.”
Taylor expects the first quarter of 2016 to remain a slow-down period for the American oil market, but later quarters may pick back up again.
The U.S. Energy Information Administration forecasts U.S. regular gasoline retail prices to average $2.36 a gallon for 2016. The EIA also estimates that crude oil production will decrease through the third quarter of 2016 before growth resumes late in 2016.
OPEC Oil Swamp
While gas prices usually fall in the winter months due to reduced demand for gasoline, oil producers with OPEC (Organization of the Petroleum Exporting Countries) have vowed to keep up production rates and further swamp the market because of expectations of increased demand.
OPEC’s pace of output has also been viewed by some as subversive economic warfare on the United States, Taylor said. West Texas Intermediate crude oil closed out last week with a Friday settlement of $35.62 per barrel.
“OPEC is extremely frustrated with losing dominance,” Taylor said of America’s oil boom with new fracking technology.
Average retail gasoline prices in Arkansas have fallen 3.5 cents per gallon in the past week, averaging $1.80 gallon Sunday, according to gasoline price website GasBuddy.com’s daily survey of 1,826 gas outlets in Arkansas. This compares with the national average that has fallen 1.7 cents per gallon in the last week to $2.01 gallon.
With both Brent and West Texas Intermediate crude oil prices reaching their cheapest levels since the global economic crisis, attention is now focused on the Federal Reserve’s potential action to raise interest rates, AAA states.
Members of Congress are also working on a budget deal that could include an end to the decades-old ban on U.S. crude oil exports, AAA states in its latest fuel report. An end to the ban would allow unprocessed crude oil produced in the U.S. to enter the global oil market, which could impact both domestic production and global supply.
U.S. crude oil production, however, is expected to be about 8.8 million barrels a day in 2016, according to the EIA. Total U.S. crude oil production declined by about 60,000 barrels per day in November compared with October.
OPEC’s latest report Monday revised its projection of global demand to show a 2015 demand growth at 1.53 million barrels per day with global consumption averaging 92.88 million barrels a day this year.
Natural Gas Exceeds Coal
The EIA also states in its latest Short Term Energy Outlook report that electricity generated from natural gas-fired power plants exceeded generation from coal-fired plants in September for the third month in a row. Before April 2015, the monthly share of total U.S. generation fueled by coal had always been larger than the natural gas share, the EIA report adds.
“Natural gas generation in September was 4 percent higher than the level generated by coal,” the EIA report states. “This increased use of natural gas for electricity generation primarily reflects sustained low prices for the fuel.”
This article was written by John Lovett from Times Record, Fort Smith, Ark. and was legally licensed through the NewsCred publisher network.