- within Immigration, Litigation and Mediation & Arbitration topic(s)
- with Senior Company Executives, HR and Finance and Tax Executives
- in United States
- with readers working within the Automotive, Basic Industries and Insurance industries
This morning, someone asked me what is going to happen when they basically start giving oil away. He said based on supply, gasoline should be 30 cents a gallon at the pumps, like the old days when he was a kid.
I was stunned. In fairness, this happened before I had any coffee. But, I was still stunned.
I know what happens when oil is at $110 per barrel and I know what happens when a gallon of gas costs $4.00... but 30 cents a gallon?!
In case you were wondering, it looks like a gallon of gas hasn't cost 30 cents a gallon since about 1965, according to reports by energy.gov. This also doesn't take into account inflation.
Interestingly, the U.S. Energy Information Administration ("EIA") reported today that U.S. gasoline prices in 2015 were the lowest since 2009 – averaging $.243 per gallon in 2015.
In today's news, Brent Crude oil prices dipped as low as $32.77 at one time today, according to a Wall Street Journal article, " Oil Prices Finish Below $34, At levels not seen in more than a decade due to China worries, supply glut."
Bloomberg reports WTI closed at $33.26/bbl and Brent settled at $33.80/bbl today. See our prior blog post " A Light and Sweet Primer on Oil Prices and Price Differentials" for a great discussion on these benchmark prices.
The issue is still supply. CNBC reported today that "a rebound will only come when producers seriously cut back on the amount they are pumping."
You may be asking yourself – what is the breakeven point in this price environment? Are we "fossil fools" to be watching the daily swings of commodity prices so closely?
In a presentation on "ND Oil and Gas Counties," dated September 10, 2015, that can be found here, the North Dakota Department of Mineral Resources reports that the statewide breakeven point for the State of North Dakota is approximately $34 per barrel. According to the presentation, the breakeven point for production in several counties is in the $24.00 to $28.00 per barrel range.
Another out of the blue random fact about changing commodity prices: natural gas closed at $2.40/MMBtu, an increase of 5.78% according to Bloomberg.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
