Posted on 05/10/2015 12:09:44 PM PDT by thackney
The drop in oil prices was supposed to help the economy this year. So far, it seems to have mostly hurt.
The theory of why lower oil costs should boost U.S. growth is simple. Despite gains in domestic production from the shale boom, the country is a still a net importer of crude. So when oil prices fall, American consumers and businesses spend less money on stuff produced abroad, leaving them with more to spend on stuff produced at home. And gross domestic product goes up.
Yet GDP expanded at an annual rate of just 0.2% in the first quarter-a figure likely to be revised lower. And while some weakness was due to severe weather and West Coast port problems, growth this quarter is looking muted. Forecasting firm Macroeconomic Advisers expects GDP to grow at just a 2.2% rate.
That speaks to an underlying weakening of the economy driven at least partly by oil. GDP growth in the first quarter would have been three-quarters of a percentage point higher if it hadn’t been for a drop in private investment in nonresidential structures, which includes items like warehouses and power plants.
More than half that decline was due to a sharp falloff in spending on oil and gas wells and exploration. Investment in capital equipment was essentially flat in the first quarter, but would have risen absent a decline in purchases of mining and oilfield machinery. And those categories don’t capture lower spending from the oil industry on other equipment such as trucks and computers.
The dropoff in oil investment will continue to be felt in the current quarter: The U.S. rig count is down 15% from the end of the first quarter.
(Excerpt) Read more at wsj.com ...
When you cut off all four legs off the frog and say jump, it doesn’t.
Conclusion: Frog is deaf!
The real story is just how much the oil boom was carrying the overall economy.
It perfectly illustrates the absolute economic disaster of Obama’s polices on the overall economy.
And yet, the recovery from shale reserves, coupled with the lower transportation costs to move to refineries and retail markets, makes the US-produced crude a sufficiently profitable enterprise to compete handily with most sources of imported crude.
Shifting from petroleum alone to natural gas utilization for industrial and transportation purposes also has a powerful effect on crude oil prices. I am entirely in favor of converting a LARGE part of road transportation from Diesel fuel or gasoline to Compressed Natural Gas, because of this steadily growing supply of NG production.
It works, it’s clean, and it’s available. And in the end, probably at net, less of a danger than either Diesel fuel or gasoline now is.
True.
Another way of looking at it is to disassociate by state/region. The truth is that most of the economic growth was going on in places like Texas, where high oil prices help the local economy much more than low gasoline prices.
These also happened to be places with a good business climate.
Lowering the price of gasoline is an incentive everywhere, but the business climate everywhere is not such that increased consumption is going to offset the hit in the areas set up to grow rapidly.
NatGas for transportation fuel is a good thing for the US.
Just remember, we need the US government to remove needless regulations and restrictions, not subsidize with tax dollars.
Please show me an over the road tractor for heavy haul (105,500 lbs GVW) that actually functions out here (Pacific Northwest) in the mountains. Until then, not interested, sorry.
Until the torque ratings get up to the 1850-2000 lb/ft level, they’re just for in city use by little rigs.
on Friday I went to Sam’s to buy diesel fuel for my van
the price of diesel was $2.34....... the price of regular gas was $2.34
parity at last
Peterbuilt lists the Cummins ISX15 available as natgas but I don’t find the direct link to the specs.
http://www.peterbilt.com/products/alternative-fuels/386/#specifications
The ISX12 is under your specs, 400 hp - 1450 lb-ft.
http://www.cumminswestport.com/models/isx12-g
This was a few years ago:
PETERBILT RECEIVES ORDER FOR 200 LIQUEFIED NATURAL GAS TRUCKS
http://www.peterbilt.com/about/media/2011/328/
Denton, TX (April 21, 2011)
Powered by the Westport GX engine, Peterbilt’s Model 367 LNG offers up to 475 horsepower and 1,750 ft-lbs of torque.
Looks like that 15 liter NatGas engine has proved too expensive to stay in the market. I kept searching and found:
Westport to End 15 Liter LNG Engine, Citing High Cost of Building Power Plant
http://www.ttnews.com/articles/printopt.aspx?storyid=33453
So, a blip in the way the oil industry runs and corresponding lower gas prices “proves” that cheap energy is bad for the economy because the blip didn’t help. That smacks of the same “science” that the Global Warming nuts use - they look at a teeny slice of the whole and make their assertions from the minuscule anomaly that threw a few actors off their marks and cues.
a blip?
Half of the drilling industry shut down is a blip?
Pathetic.
Missed the point - not a blip for the oil industry in general - a blip in the long term "status quo" of oil/gas prices when it comes to the author's determination that cheap energy is actually bad for the economy - nothing settled in long enough to make that determination.
Cute on the "pathetic" can't give you a "touche'" for it though - just a "nice knee-jerk-jump- the-gun try".
You are missing the point. The Drilling and Exploration side is the one that has been spending the money in the US economy.
True statement, but I would add three points: (1) It takes time for the lower energy prices to ripple through the economy and have an effect. (2) For many Americans the lower gas prices simply took pressure off their budgets. The lower gas prices won't finance a new car or house. (3) Many American businesses are still holding back on expansion because they are uncertain how long the lower prices will last. They know Obama wants prices higher.
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