Diesel today

[Tomtint]

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.

That price they need for profitability... 58.00 Is based on today's prices of energy itself. Once that goes down it lowers every other metric across the board. Which lowers the number they themselves need to be profitable.

 

[jyoutz]

That price they need for profitability... 58.00 Is based on today's prices of energy itself. Once that goes down it lowers every other metric across the board. Which lowers the number they need themselves to be profitable.

True to an extent. They do have fixed costs for labor that are much higher than a few years ago, especially since there’s an oil field labor shortage. And there are other fixed costs as well. The other factor is world market supply and demand, much of which is outside of domestic industry control. We’ll see where this goes.

 

[Hay Dude]

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

Aren’t you the one who always said oil was a world wide commodity controlled by OPEC? Maybe they will pack it under under $58/brl with the most expensive types of oil drilling in the USA, but that don’t mean other types of drilling in the dozens of other OPEC countries won’t drill at $40/brl

 

[Hay Dude]

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...

Yeah if you wanna talk fuel prices, it gets my attention since I use about 100X what the average American uses.
It’s a big deal to me. Enormous effects on profitability. Whole business runs on #2.

 

[jyoutz]

Aren’t you the one who always said oil was a world wide commodity controlled by OPEC? Maybe they will pack it under under $58/brl with the most expensive types of oil drilling in the USA, but that don’t mean other types of drilling in the dozens of other OPEC countries won’t drill at $40/brl

I said oil is a commodity traded on the world market and subject to those price fluctuations from all sellers, not just OPEC. And yes, some of the middle eastern countries can profitably produce oil when prices are lower than $58/barrel due to the geologic nature of their oil reserves. But the U.S. is currently the world’s largest producer and the world’s largest oil reserves are in the Permian Basin. By far most U.S. production comes from this region. And this is shale geology where most production comes from fracking. U.S. industry isn’t going to drill if prices are below profitability.

 

[rScotty]

Yeah if you wanna talk fuel prices, it gets my attention since I use about 100X what the average American uses.
It’s a big deal to me. Enormous effects on profitability. Whole business runs on #2.

Doesn't look like a typical supply/demand curve. Special interests, maybe. Greed, too.

 

[paulsharvey]

Yeah if you wanna talk fuel prices, it gets my attention since I use about 100X what the average American uses.
It’s a big deal to me. Enormous effects on profitability. Whole business runs on #2.

Yeah 100% understand that, but is it easier to plan and build a business model on a relatively fixed price of say $3.25/gal; or wildly swinging prices from $2/gal to $4/gal over the coarse of 2 years. Sure, the second situation, you likely have a lower average, but if it sat at $4/gal (just for arguments sake, but it could be $5 or $6) for 4 months, you could go bankrupt.

It's honestly the same for a lots of people, they can learn to budget and make things work on a stable price, but when their normal $400/month shoots upto $650/month, they are missing mortage payments.

 

[paulsharvey]

It's hard to say, cut hay when diesel is $5/gal, and sell in the fall when fuel dropped to $3/gal, and recoup that price, because others hay on the market might have been cut at $4 or $3/gal.

 

[grsthegreat]

Hey… the price just droppedView attachment 2115432

I feel for you…heres one of ours yesterday.

 

[deserteagle71]

I feel for you…heres one of ours yesterday.


Wow! I'm in Nevada just south of you. Our regular unleaded is still about $1 a gallon higher than what you are seeing. But then all gasoline in northern Nevada comes in a pipeline from California.

 

[jyoutz]

I feel for you…heres one of ours yesterday.


View attachment 2115442

I fueled my Jeep with regular at Costco about 2 hours ago. It’s now down to $2.49 and diesel is $2.97.

 

[paulsharvey]

It's hard to say, cut hay when diesel is $5/gal, and sell in the fall when fuel dropped to $3/gal, and recoup that price, because others hay on the market might have been cut at $4 or $3/gal.

Case in point, that same exact station, $3.59 this evening; so a $0.30 swing in 3 days. Thats what makes budgetting and planning difficult.

 

[kenhar]

Remember back in the 70's when the US ran short of oil, gas was $.29 to $.35 a gallon. For a while people could only buy 10 gallons at a time and only buy every other day pertaining to the last digit of your license plate. 55 mph was the nationwide speed limit. After about a year of that, gas prices doubled and then there was plenty of oil again. Does politics not enter into fuel prices just like everything else? Bad weather, an uprising in Saudi, or any other "ripple" in day-to-day oil business, prices shoot up overnight but usually takes weeks to go back down if ever. Politicians look the other way. It ain't price gouging, it's just business as usual.

 

[Hay Dude]

I fueled my Jeep with regular at Costco about 2 hours ago. It’s now down to $2.49 and diesel is $2.97.

This is why you don’t feel the pinch. As Jeep owners, We both know they don’t even take 20G of gas to fill.
Try feeling the price increases when you put 180 gallons of diesel in a MT655E. The $2 increase per gallon we’ve endured for the last 3 years is an additional $360 per tankful.

That’s why fuel prices mean more to some than others.

 

[Tomtint]

Rember back in the 70's when the US ran short of oil, gas was $.29 to $.35 a gallon. For a while people could only buy 10 gallons at a time and only buy every other day pertaining to the last digit of your license plate. 55 mph was the nationwide speed limit. After about a year of that, gas prices doubled and then there was plenty of oil again. Does politics not enter into fuel prices just like everything else? Bad weather, an uprising Saudi, or any other "ripple" in day-to-day oil business, prices shoot up overnight but usually takes weeks to go back down if ever. Politicians look the other way. It ain't price gouging, it's just business as usual.

Much of that era was due to poor energy policy and planning by our own gubment.. and there was little domestic product to keep the nation supplied.

 

[Tomtint]

This is why you don’t feel the pinch. As Jeep owners, We both know they don’t even take 20G of gas to fill.
Try feeling the price increases when you put 180 gallons of diesel in a MT655E. The $2 increase per gallon we’ve endured for the last 3 years is an additional $360 per tankful.

That’s why fuel prices mean more to some than others.

I'm at the pump virtually every day. 9 vehicles and various other fuel needs. So when gas or diesel is 2-3.00 more pg than it was.. and should be.. it adds up

 

[Chanceywd]

Rember back in the 70's when the US ran short of oil, gas was $.29 to $.35 a gallon. For a while people could only buy 10 gallons at a time and only buy every other day pertaining to the last digit of your license plate. 55 mph was the nationwide speed limit. After about a year of that, gas prices doubled and then there was plenty of oil again. Does politics not enter into fuel prices just like everything else? Bad weather, an uprising Saudi, or any other "ripple" in day-to-day oil business, prices shoot up overnight but usually takes weeks to go back down if ever. Politicians look the other way. It ain't price gouging, it's just business as usual.

It was 4 gal for $1 when I remember it in the 70's here in central NY. There was a what was called then a gas war of stations lowering prices daily to get your business. I was working for a little over $4 an hour and traveling about 50 miles each way to my job in Syracuse. I quit that and got into a different kind of work locally because it was just getting stupid with all you cited.
One thing I have always thought about is the sales tax part of this. Politicians like Gov Hochul have no incentive to control prices when that windfall sales tax comes in and that isn't just on fuel it is on vehicles, electricity, phone bills, internet, shipping building materials, almost everything that is almost doubled in price. Brings them the extra money they need for all their sanctuary projects!

 

[Jframe]

Here in the furthest north, furthest west and furthest east state there is a common belief that come January 20 the administrative prohibitions now in place on producing new oil will be lifted. I share that belief.

 

[jyoutz]

This is why you don’t feel the pinch. As Jeep owners, We both know they don’t even take 20G of gas to fill.
Try feeling the price increases when you put 180 gallons of diesel in a MT655E. The $2 increase per gallon we’ve endured for the last 3 years is an additional $360 per tankful.

That’s why fuel prices mean more to some than others.

My truck takes 36 gallons of diesel. But $2.49 for regular and $2.97 for diesel currently isn’t too high. The last time I remember when diesel was less than $2 was before ULS fuel was introduced in 2007.

 

[Hay Dude]

My truck takes 36 gallons of diesel. But $2.49 for regular and $2.97 for diesel currently isn’t too high. The last time I remember when diesel was less than $2 was before ULS fuel was introduced in 2007.

Yeah, but you said Jeep. We know Jeeps have tiny fuel tanks.