Skip to comments.Why fuel prices will stay low for the next decade
Posted on 02/08/2016 12:22:58 PM PST by nascarnation
The top exec at an oil trading company thinks the era of crude trading at over $100 a barrel might never return, and the stuff could remain between $40 and $60 for as long as the next 10 years.
"You have to believe that there is a possibility that you will not necessarily go back above $100, you know, ever," Ian Taylor, Chief Executive Officer of Vitol Group BV, told Bloomberg. His company is the world's largest independent oil trader. Instead of any significant increase or decrease, the exec believes crude could hit $45 to $50 a barrel in the latter half of 2016 and hover around $50 for the next decade. Prices would fluctuate about $10 in either direction over those years.
The key to these sustained lower prices is that oil production in US shale fields, Canadian tar sands, and other parts of the world remove some of OPEC's power to set prices. Plus, reduced sanctions on Iran further add to the global supply. "It's hard to see a dramatic price increase," Taylor said to Bloomberg. OPEC's own numbers back up Taylor's prediction. A 2015 study from OPEC countries forecasted crude to be between $40 and $76 a barrel in 2025.
One thing that might boost oil prices is if OPEC convinces other countries to reduce production, and Taylor thinks there's a chance that could happen. "It's probably slightly against, 60-40 against, but it's a real possibility," he told Bloomberg.
Cheap oil continues to benefit American drivers at the gas pump. The AAA Daily Fuel Gauge Report puts the current national average at $1.739, which is down 44 cents from the same day last year. Oklahoma has the lowest state average at $1.42 a gallon. Low fuel prices have also spurred new car sales, especially trucks, crossovers and SUVs.
I personally hope it drops more, but maybe I am being selfish.
I’m old enough to remember when I could nearly fill the tank of my old Impala with $5. Of course $5 was a lot harder to come by in those days...
so am I, well the tank of an old VW Bug that is, but still. . .
of course that was evil LEADED gas! LOL
The guy is predicting a relatively stable oil price for the next decade? That would be a departure from the past.
I filled up for $1.19 per gallon, over the weekend. Oklahoma City.
You got that right. 25 cent hamburgers and 30 cents for gas.
McDonalds economics tells you where we are now.
Yea, but $5 was also worth more than it is today.
But T. Boone Pickens swore we would never see oil below $100 a barrel again. Instead we needed to give him and Nancy Pelosi trillions for pinwheels.
Best I witnessed was 1.39 in middle TN last week.
Of course Franklin, TN was charging 1.92
1.61 here in Charlotte.
1.19 is hella cheap.
Yeah, that's what I said.
I’m surprised he didn’t make it much bigger, say like $25/bbl and then they could back off to $10 and everybody would say...well that’s OK...go for it.
Well, I guess it’s time to go buy that new SUV then.
Oil was never more than 30-40bbl commodity, EVER. Every dime over that range that has been paid in the past has been pure manipulation of the market by contract churning and other types of fraud.. said that when Oil was over $100 bbl and say it now, because its the truth.
There never was a shortage of oil, just lots of folks willing to manipulate the system to line their own pockets.
This is going to make some Freepers really mad. Low fuel prices are an evil conspiracy to them.
If fuel prices stay low, the manufacturers are going to have a big mismatch between what the govt requires them to build (Corp Average Fuel Economy regulations) and what people want to purchase (Pickups and SUVs).
There will be BIG incentives on small cars.
All I know for sure is I’m driving cheap and heating my house cheap.
Between the “globull warming” and the cheap nat gas, my Dec monthly gas bill was less than 100 bucks.
I guess we owe it all to Caliph Baraq.../s/s/s/s/s
Most small cars are money losers.... Last I checked Chrysler was losing money on every Fiat it sold.... only does it to keep its CAFE rating. Small cars have no margin, because no america is willing to drop big money for them.. so manufacturers can’t get premium prices for them no matter how hard they try.
When the economy truly picks up, they are going to be even harder to sell.
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