I found this interesting info and let's hope it's right. Analyst predicts plunge in gas prices By Kevin G. Hall McClatchy Newspapers WASHINGTON — The recent sharp drop in the global price of crude oil could mark the start of a massive sell-off that returns gasoline prices to lows not seen since the late 1990s — perhaps as low as $1.15 a gallon. "All the hurricane flags are flying" in oil markets, said Philip Verleger, a noted energy consultant who was a lone voice several years ago in warning that oil prices would soar. Now, he says, they appear to be poised for a dramatic plunge. Crude-oil prices have fallen about $14, or roughly 17 percent, from their July 14 peak of $78.40. After falling seven straight days, they rose slightly Wednesday in trading on the New York Mercantile Exchange, to $63.97, partly in reaction to a government report showing fuel inventories a bit lower than expected. But the overall price drop is expected to continue, and prices could fall much more in the weeks and months ahead. Here's why: For most of the past two years, oil prices have risen because the world's oil producers have struggled to keep pace with growing demand, particularly from China and India. Spare oil-production capacity grew so tight that market players feared that any disruption to oil production could create shortages. Fear of disruption focused on fighting in Nigeria, escalating tensions over Iran's nuclear program, violence between Israel and Lebanon that might spread to oil-producing neighbors, and the prospect that hurricanes might topple oil facilities in the Gulf of Mexico. Oil traders bet that such worrisome developments would drive up the future price of oil. Oil is traded in contracts for future delivery, and companies that take physical delivery of oil are just a small part of total trading. Large pension and commodities funds are the big traders and they're seeking profits. They've sunk $105 billion or more into oil futures in recent years, according to Verleger. Their bets that oil prices would rise in the future bid up the price of oil. That, in turn, led users of oil to create stockpiles as cushions against supply disruptions and even higher future prices. Now inventories of oil are approaching 1990 levels. But many of the conditions that drove investors to bid up oil prices are ebbing. Tensions over Israel, Lebanon and Nigeria are easing. The hurricane season has presented no threat so far to the Gulf of Mexico. The U.S. peak summer driving season is over, so gasoline demand is falling. With fear of supply disruptions ebbing, oil prices began sliding. With oil inventories high, refiners that turn oil into gasoline are expected to cut production. As refiners cut production, oil companies increasingly risk getting stuck with excess oil supplies. There's already anecdotal evidence of oil companies chartering tankers to store excess oil. All this is turning financial markets increasingly bearish on oil. "If we continue to build inventories, and if we have a warm winter like we had last winter, you could see a large fall in the price of oil," said Gary Pokoik, who manages Hedge Ventures Energy in Los Angeles, an energy hedge fund. "I think there is still a lot of risk in the market." As it stands now, the recent oil-price slump has brought the national average for a gallon of unleaded gasoline down to $2.59, according to the AAA motor club. In the Seattle area, prices per gallon have fallen to $2.856 currently from $3.071 a month ago, a decline of 7 percent, according to AAA. Should oil traders fear that this downward price spiral will get worse and run for the exits by selling off their futures contracts, Verleger said, it's not unthinkable that oil prices could return to $15 or less a barrel, at least temporarily. That could mean gasoline prices as low as $1.15 per gallon. Other experts won't guess at a floor price, but they agree that a race to the bottom could break out. "The market may test levels here that are too low to be sustained," said Clay Seigle, an analyst at Cambridge Energy Research Associates, a consultancy in Boston. On Monday, the oil-producing cartel OPEC hinted that if prices fall precipitously, OPEC members would cut production to lift them. But that would take time. "That takes six to nine months. If we don't have a really cold winter here [creating a demand for oil], prices will fall. Literally, you don't know where the floor is," Verleger said. "In a market like this, if things start falling ... prices could take you back to the 1999 levels. It has nothing to do with production." http://seattletimes.nwsource.com/html/businesstechnology/2003257679_oilconsumers14.html
I hope that if the prices do drop greatly that we don't forget how the unstable OPEC nations had us by our balls. I hear Brazil is doing really well making and selling sugarcane based ethanol. The yield's are much higher than with corn. It would be neat if this coul dbecome a new cash crop for the gulf coast here in the states.
Isn't it funny how just 6 months ago people were complaining about 2.50 a gallon gas and now it seems like a bargain. Looks like people adjust to the price real quick. I even saw a news report about now being the right time to buy an SUV. [TinFoilHat] I bet the prices come back up after the election. [/TinFoilHat]
Working at QuikTrip.... The gas has been going down constantly for the last few weeks. TODAY it went down 6 cents.
I have made my prediction. Whats yours? The way I see it not that much has changed. 1. Iraq is still a hell hole and producing less oil than before the war. 2. Iran hasn't opened up their nuclear facitilities to the IAEA 3. China and India's demand is still growing 4. Oil workers in Nigeria are on strike over security. 5. BP oil fields in Alaska are still running way below capacity due to pipeline issues. 6. US oil stockpiles are declining http://www.bloomberg.com/apps/news?pid=20601086&sid=amneSA6kn2QI&refer=news I think the author of the article in the first post deserves a few too. He's crazier than me for thinking we will see prices at $15 a barrel.
Yeah. See, I thought we had already tapped our reserves in a pretty big way. If there is any kind of excess it should probably be put into the strategic reserves shouldn't it?
I was reading somewhere that someone just stumbled upon the largest reserve in recorded history in the gulf of mexico this week. Any truth to this?
Looks like you're right "Oil analysts and company executives said newly released test results from a well 175 miles off the coast of Louisiana indicate that the oil industry will be able to recover well more than 3 billion barrels, and perhaps as much as 15 billion barrels, of oil from a geological area known as the lower tertiary trend, making it the biggest addition to U.S. petroleum reserves in decades. The upper end of the estimate could boost U.S. reserves by 50 percent. "This looks to be the biggest discovery in the United States in a generation, really since the discovery of Prudhoe Bay 38 years ago," said Daniel Yergin, chairman of the consulting firm Cambridge Energy Research Associates Inc." http://www.washingtonpost.com/wp-dyn/content/article/2006/09/05/AR2006090500275.html I think that's what you're talking about?
Pretty big but not the biggest. The comparison I read is that is is simialr in size to Alaska's Prudhoe fields. Unfortunately it will be a while before it starts producing. They also estimate that when it does come on line we will still need to import 50% of our oil needs.