Gas...how low can it go?

SoonerAviator said:
Not to mention the fact that just about every storage terminal is completely filled up. Some will start to load onto oil tankers and just park them in the gulf like what was done during the '08 recession, waiting until demand comes back and prices are more profitable. The only limitation would be refining capability, but I don't think demand will spike that quickly.
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Juliet Hotel said:
Its already happening. Read an article about it this morning. It said VLCC (Very Large Crude Carrier) companies are making money hand over fist as their rates go through the roof. They're signing contracts to use their ships as floating storage for the next 6-12 months which means few ships available to move the crude. The article said they're getting $70k-$90K per day on 6-8 month storage contracts.
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The NYMEX forward strip for WTI is in contango. For example the Thursday close for the front month contract, May 2020, was $25.32 and the back month contract 8 months out, January 2021, closed at $33.49. That's why the tankers were getting chartered; traders can back-to-back the buy and the sell, and lock in a guaranteed profit (after covering costs for storage + transport from Cushing to tidewater) on the unusually steep forward curve that is the result of the near term surplus.

But the game was profitable as the front month contracts were collapsing last month and the curve was much steeper. Just like our hopes for the COVID-19 curve, the forward curve for oil is already flattening. On Friday the front month contract closed up $3.57 per barrel. The 1-year out contract closed up $0.54, and most everything from July, 2021 out closed flat or down. The market is already starting to price in that it does not expect the current glut to last.

wsuffa said:
I saw a report today that oil stocks are so high that the price for crude may go below zero.

Let that sink in.
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That happens when someone stupidly allows themselves to get caught with inventory and no contracted storage or pipeline transportation space. Its an anomaly, not an indication that "everyone" is being forced to sell barrels at that price. All it takes is one distressed trade like that during the day and Bubblevision's hyperventilating hosts (CNBC) make it into a daytime soap drama to sell advertising.

Ghery said:
There was a discussion about that yesterday on CNBC. The short of it was that it cost more to shut down and restart a well than to pay someone to take the oil off their hands. At least for the short term.
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Not all wells are created equal, just like not all crude oil is created equal.

It's a LOT more expensive to shut in offshore deepwater Gulf of Mexico production than a stripper well in Oklahoma or East Texas or a shale oil well in the Eagle Ford in south Texas. The strippers started getting shut in pretty quickly in March, and may account for up to the first ~million barrels per day of US domestic production decline.

It's also very difficult to turn off most of the barrels that come out of the Canadian oil sands. Whether it's an oil sand mining operation like Syncrude or a SAGD (steam assisted, gravity drainage) project, the former have high fixed costs that kill any significant turndown short of a complete shut-in, and the latter involves shutting off the steam injection and risking a long, expensive restart of a cold reservoir with the potential of permanent reserves losses.

To further complicate matters, over the decades since the '73 Arab oil embargo and the '79 Iranian revolution, the US Gulf Coast refining complex has re-tooled to reduce dependence on imported light crude and is now geared to run blends with high percentages of heavy, high sulfur, paraffinic oil. These refineries are simply not capable of absorbing the high volumes of very light, volatile sweet crude that comes from the shale oil plays in Texas and North Dakota. That is one reason some of that crude is being exported to refineries elsewhere, such as the Valero refinery in Quebec.
 
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Doc Holliday said:
It's not "filled up" at this point, but it's not empty either.

https://www.worldoil.com/news/2020/3/13/trump-to-fill-us-strategic-petroleum-reserve-to-the-very-top
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That was three weeks ago. More recently:

The Energy Department is suspending its plan to buy low-priced oil to restock the nation’s emergency Strategic Petroleum Reserve after Congress chose not to provide funding for the purchase in its emergency pandemic relief package.

The department withdrew a solicitation Thursday for buying 30 million barrels of oil from U.S. producers, which would have been the first round of purchases for a total of 77 million barrels — the full amount of open capacity in the SPR.

https://www.washingtonexaminer.com/...chase-after-congress-denies-funding?_amp=true
 
Two stations at $1.01 in Joplin, MO this AM. Springfield's best price is $1.44...around the corner from my GF's office...convenient.
 
There is sub-$2 gas in Vermont, most of it in the Champlain Valley well south of Burlington - places like Middlebury and Rutland are seeing prices as low as $1.59. In central VT, the lowest you are likely to see is $2.09 - that's what it is in my town as of now.
 
The two stations I saw yesterday at $1.82 have dropped back to $1.54 and I am seeing some going to $1.35 today.
 
PS, autogas is still a mouthwatering $3/gallon here in Seattle. horse****

EDIT: AVGAS $5.40 no breaks for us up here
 
GasBuddy.com has a heat map of prices/gallon

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MIFlyer said:
for all the money the gov't is spending, at these prices ($21/barrel), i'd love them to make that chockablock full.

Edit, I made my comment before reading the article that says the president has directed the very same thing.
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See my post #43 above. I could make a comment that filling the SPR is a lot more important than gifting the Kennedy Center $25M, but I won't. ;)
 
Laurie just went to get groceries for the week and fill up the gas cans (sent her with all of them - about 25 gallons worth). Last I saw we were still around $1.70/gallon for regular but that was a week or more ago. We'll see if it's gone down.

I did just call up today to have the propane tank refilled... $1.25/gallon for that.
 
E-free 87 is still over $2.20 a gallon here. Talk about rip. I could buy around 100 tomorrow but still sitting and waiting for lower prices.
 
Once Saudi Arabia and Russia get done with their price war it will start going back up. It will go up as well when we're done with the limited travel / social distancing and people are driving.
 
E10 is $1.27 and Murphys has ethanol. Free mogas at 1.74, personally tested thats worth cans and a Ladder
West/central MI...
 
I paid $2.299 / gallon this afternoon. Haven't seen it that low in ages in western Washington.

KCLS has 100LL for $2.80 / gallon right now. Not sure what the club paid for 100LL at KOLM when I filled up the 172N this afternoon.

BTW, this is post 9999 for me.
 
Still running $1.38/gal in Tulsa at QT. Kind of amazed that we are higher than a lot of the other regions. Usually we have some of the lowest prices per gallon, and fairly low fuel tax as well. I’m not complaining by any stretch, although we’ve only filled the tank on one vehicle in 2 weeks. We spend about $350/month in gas in average, I bet it drops to $150 or less this month.
 
I filled up my car earlier this week for $1.17, local FBO is still $4.50 for 100LL. Toledo, OH
 
Just west of Joplin, in Oklahoma (In the Miami area), it's $0.98 & $0.99 at a few stations. Joplin is still $1.01.
 
I can see the glow of the Apache oil field 30 miles north of me, and beyond that, the Permian Basin (a huge area of oil and gas)
Ie I am pretty damn close to where the stuff is coming out of the ground.
Our gas? A disappointing $2.29/gal regular. Some places might be lower but that is our main source.
 
Let'sgoflying! said:
I can see the glow of the Apache oil field 30 miles north of me, and beyond that, the Permian Basin (a huge area of oil and gas)
Ie I am pretty damn close to where the stuff is coming out of the ground.
Our gas? A disappointing $2.29/gal regular. Some places might be lower but that is our main source.
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That's because they have to pump and/or barge it to a refinery somewhere and backhaul by truck the gasoline & diesel product back out your way. ;)
 
100LL is 3.75 at a nearby airport.
 
Unleaded at the Costcos in Plano is $1.22.
 
I filled up for $1.09 yesterday - car gas that is... our Mooney is out of annual... :(
 
Enjoy the cheap gas. Just remember, for every dime you save on a gallon, it's likely that a couple thousand of your countrymen lost their job.
 
OkieFlyer said:
Enjoy the cheap gas. Just remember, for every dime you save on a gallon, it's likely that a couple thousand of your countrymen lost their job.
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Yeah, this. Know too many affected by this to enjoy it.
 
and you can make that far more generic...

OkieFlyer said:
Enjoy the cheap products at Walmart. Just remember, for every dime you save on that crap, it's likely that a couple thousand of your countrymen lost their job.
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timwinters said:
and you can make that far more generic...
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I don't disagree. However, what you speak of has been a long slow transition over the last 40 years or whatever. This is sudden, unexpected, and causing thousands to lose their jobs on a near daily basis across the country. Just driving through town this evening, I took note of the fleets of trucks parked in the oilfield office parking lots, the workover rigs parked in the yards, the drilling rigs stacked out, the pipe yards full of unused pipe, the rental companies with every square inch of their yard crammed with un-rented equipment, the dump trucks, dozers, side-booms, trackhoes, backhoes, skid steers sitting in yards, the hot oil rigs, bobtails, transports, wireline trucks, swab rigs sitting around. Each one of those idle trucks, rigs, and equipment represents a man or woman who was providing for their family and a valuable service two weeks ago. In a town of 3000, hundreds of lost jobs is a brutal blow. They will all be needed again, hopefully soon, but chances are some of them will be on really hard times until their expertise is demanded once more. All of us in "the patch" are aware of the ups and downs, but low oil prices coupled with the near shutdown of nearly the whole country is a blow nobody could have seen coming. It's tough, and of course many industries are hurting, but generally speaking, people don't dance a jig when other industries are crippled. When gas goes down, it's yippee freaking skippy.

Didn't mean to get grouchy. That one just hits real close to home.

Carry on.
 
OkieFlyer said:
I don't disagree. However, what you speak of has been a long slow transition over the last 40 years or whatever. This is sudden, unexpected, and causing thousands to lose their jobs on a near daily basis across the country. Just driving through town this evening, I took note of the fleets of trucks parked in the oilfield office parking lots, the workover rigs parked in the yards, the drilling rigs stacked out, the pipe yards full of unused pipe, the rental companies with every square inch of their yard crammed with un-rented equipment, the dump trucks, dozers, side-booms, trackhoes, backhoes, skid steers sitting in yards, the hot oil rigs, bobtails, transports, wireline trucks, swab rigs sitting around. Each one of those idle trucks, rigs, and equipment represents a man or woman who was providing for their family and a valuable service two weeks ago. In a town of 3000, hundreds of lost jobs is a brutal blow. They will all be needed again, hopefully soon, but chances are some of them will be on really hard times until their expertise is demanded once more. All of us in "the patch" are aware of the ups and downs, but low oil prices coupled with the near shutdown of nearly the whole country is a blow nobody could have seen coming. It's tough, and of course many industries are hurting, but generally speaking, people don't dance a jig when other industries are crippled. When gas goes down, it's yippee freaking skippy.

Didn't mean to get grouchy. That one just hits real close to home.

Carry on.
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Yeah I hear it going both ways. Some friends who work for Chesapeake cheer on $3/gal gasoline and $100/bbl oil because it keeps them safely in the black, despite it stressing those at the lower end of the income scale. Then when the bottom drops out, those who have dealt with $3-$4/gal gasoline enjoy the relief. I’m just happy with a happy medium where oil and gasoline allow a decent profit, but don’t string out those not “in the patch”. It is tough to see those rigs stacked right now though, and the patch is some of the best income a small town guy can get.
 
OkieFlyer said:
Enjoy the cheap gas. Just remember, for every dime you save on a gallon, it's likely that a couple thousand of your countrymen lost their job.
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And what exactly am I supposed to do about that? Overthrow the government? Stage a coo? Or are you implying that I should feel guilty about buying cheap gas?

Yes lots of people are out of work. And others, myself included, are still working but at greatly reduced salary so that more of my employees can stay working. Nearly all who aren't working, including the 1099 gig workers, are eligible for unemployment compensation. That unemployment compensation is worth almost as much as what tons of them normally made, in some cases it will actually pay them more. And while there will definitely be businesses that fail because of this, most will not. Which means lots of those jobs will be back in a month or so.

None of that is meant to imply that this isn't bad because it is. But it could be far far worse than it actually is. I have employees who are asking me to lay them off because they'd rather stay home and collect than show up and work to insure their company is still there for them when this is all over. And you want me to fell guilty about buying cheap gas? Yeah that ain't happening. My company will survive this. The people I have laid off will come back. Or at least most of them will. The ones who have let us know they could care less about trying to keep the company afloat and would rather sit home and collect for as long as possible? Yeah they probably won't be asked back. The company is better off without them.
 
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