Diesel today

[Flogger]

In 1970, I delivered diesel for $.12 a gallon, regular gas for $,24 a gallon. Are these or were those "the good ole days"?

I remember when a gallon of gas was the same price as a can of Skoal………25 cents!

 

[jyoutz]

I remember when a gallon of gas was the same price as a can of Skoal………25 cents!

And annual income was $5,000 at that time.

 

[Flogger]

It’s connected. The industry doesn’t make profits at $40/barrel.

Around here we didn’t see the full impact of low prices. Producers have debt as a rule so as long as the well would run it pumped. When repairs were needed they shut it down. Caused a huge boom in the pulling unit business when prices went back up.

 

[5030]

The shale oil frackers say that they cannot economically operate when the crude price per barrel is less than $58. And the largest oil field (Permian Basin) is shale bedrock. Producers are not going to increase production to the extent that it drives crude prices below profitability.

Of course not it is business after all. Businesses are in business to make a profit last time I checked...

 

[paulsharvey]

I remember when a gallon of gas was the same price as a can of Skoal………25 cents!

That would be close to $11/gal now...

 

[paulsharvey]

You don't really want $2/gal gad, as a country. We need a stable full price, that businesses can factor in, while making oil companies enough profit to continue drilling/pumping/exploring/investing. Honestly, I think stable $2.75-3.25/gal is about what the market likes.

 

[jyoutz]

Of course not it is business after all. Businesses are in business to make a profit last time I checked...

Yes. That’s my point. Some people are saying that the industry will continue to increase production and prices will continue to fall. The industry isn’t going to glut the market such that crude prices fall below profitability. Current production is about where they want the profit margins.

 

[5030]

I have no issue with fuel prices, either diesel or gasoline actually. Human nature is to pay less if available but the bottom line is fuel is a necessity for most, not a luxury. I've never been happy with corn alcohol laced gas at all but that is a different subject for a different thread. I am just glad my farm diesel is a tax write off, not something that most users can do.

 

[5030]

Despite what the incoming administration alludes to, I agree. the retail price of motor fuel may come down a bit but only to the point where it's still profitable to produce it and no more.

The 'drill baby drill' mantra is just that, hype and nothing more.

I will say that refiners need to upgrade or build additional refineries just in case one goes off line for whatever reason. But increasing production and lowering prices, ain't gonna happen. It sounds good but in reality, it don't work in the grand scheme of things.

I have no issue with us going back the a net exporter of petroleum products, in fact we should be, but domestically, I don't see the price falling much at the pump. Besides, in the grand scheme of things, we have the cheapest retail cost of petrochemicals of any civilized country except maybe the middle east but then their per unit cost is 100% set by their governments.

Something I do find somewhat arcane and that is very late model vehicles (EV's excluded) get poor fuel mileage. I don't get that at all.

 

[CliffordK]

We have issues that they apparently regularly shut down a couple of major west coast refineries for routine maintenance at the same time, and suddenly fuel prices spike. Rather than somehow scheduling to stagger the outages. Part of the issue has to do with seasonal changes in fuel blends.

 

[Hay Dude]

You don't really want $2/gal gad, as a country. We need a stable full price, that businesses can factor in, while making oil companies enough profit to continue drilling/pumping/exploring/investing.

Do you know what price they need to charge per gallon to make drilling worth it? I don’t. For all we know, they may make lots of money at $40/barrel.
I know they won’t ever tell us, too.

Honestly, I think stable $2.75-3.25/gal is about what the market likes.

Until you get the bill for 4,000 gallons.
The $2-$2.50 seems way better.

 

[Hay Dude]

The shale oil frackers say that they cannot economically operate when the crude price per barrel is less than $58. And the largest oil field (Permian Basin) is shale bedrock. Producers are not going to increase production to the extent that it drives crude prices below profitability.

But that is only one type of oil production. There’s others that could be far cheaper.
Besides, who would ever divulge what price point they become profitable?
Unlike the gubmit who doesn’t have to show profit, private companies have internal numbers on profitability they keep secret.

 

[paulsharvey]

Do you know what price they need to charge per gallon to make drilling worth it? I don’t. For all we know, they may make lots of money at $40/barrel.
I know they won’t ever tell us, too.



Until you get the bill for 4,000 gallons.
The $2-$2.50 seems way better.

I don't really disagree, on a micro economic scale, but on a macro, stabile prices are more important than low prices.

I know guys that won continuing service contracts, at $2.25 gas/$2.75 diesel; and had no price escalations built in, at $4.50 diesel. They were loosing their butt's, and some of these are 3 year contracts.

For an average American, driving 12,000 miles per year, at $3.00/gal, getting a moderate 25 mph, 480 gal per year=$1440; vs $3.50/gal=$1680. Thats $240/year difference.

It's big effects are also regional; let oil go sub $50/barrel, and drive around Louisiana/Mississippi, and you will see the affects. If you drive through NY, it's probably the opposite effect.

What I never understood, the folks that Really focus on MPG are often the folks driving the least. If you have a 5 mile commute to work, it doesn't matter if you have an 8.1L Vortex getting 8 mph, or a Prius getting 45 mph, gas doesn't even show up on your budget.

Edit: my mom for instance was talking about getting a hybrid, and the great milage. She drives about 5000 miles per year now that she's retired. Same with a lot of people in larger metros, gas isn't even in their top 5 expenses. For a lot of rural guys, gad may be in the 2nd or 3rd overall expense...

 

[paulsharvey]

In the large volume side; and yes it's a 1 of 1...
I was building a trailer shop for a medium sized local freight company (200 tractors, 400 refer trailers, hauling SE US, mostly groceries, or meat to processing and meat to ship yard in Jax). Owner of our construction company was BSing with owner of trucking company about fuel prices (this was late 2008, so gas was $4.09), and the trucking company said "actually high fuel is good for us, we can factor it into our rates, and surcharge. I've got 20 guys that track every cent per mile. What high fuel does is drive the small time guy out, who doesn't know what it costs, and just drives and hopes to make money"

 

[jyoutz]

But that is only one type of oil production. There’s others that could be far cheaper.
Besides, who would ever divulge what price point they become profitable?
Unlike the gubmit who doesn’t have to show profit, private companies have internal numbers on profitability they keep secret.

Only one type of oil production for sure. But the largest oil field in the world and where most U.S. oil is produced. It’s been published in oil journals that $58 is the median price where shale oil production is profitable. Nothing about the gobment. Individual companies have higher or lower price points for profitability, but on average when west Texas crude prices fall below $58/barrel, the drillers start packing it up.

Some reading on this topic:

https://finance.yahoo.com/news/us-energy-dominance-die-under-010405219.html

 

[ultrarunner]

$4.99 diesel today at Chevron San Ramon…

 

[jyoutz]

$4.99 diesel today at Chevron San Ramon…

You guys in CA are getting screwed.

 

[ultrarunner]

You guys in CA are getting screwed.

In more ways than one… maybe why 800,000 out migration?

High fuel cost, insurance cancelation and hefty taxes explain a lot of it without even touching on crime.

 

[mjonesnh]

$4.99 diesel today at Chevron San Ramon…

$2.00 more than I seen in southern ky. last weekend at a Marathon truck stop

 

[ultrarunner]

Hey… the price just dropped