Price of oil vs price of gas

[Meandering Retiree]

We live near Patoka, IL where the oil companies are buying land and building tanks (1.5 million gallons or more each) like there is no tomorrow. So far they have built seven tanks and anticipate building nearly that many more. My understanding is that they anticipate receiving oil from the oil sands in Canada and then building a refinery in southern Illinois. That is coffee shop talk and I am not certain just how much faith to place in it but welders are making a small fortune here working 60 hour weeks. Enjoy the cheap price of fuel now because it will go back up.

[tmar10]

The greed for profits by OPEC and its friends may have hurt them greatly in the long term as we search for other sources of oil and powerplants. From what I have read, the break-even for a barrel of oil from the Canadian oil sands is now less than $15.00 US. Will we have some more ups and downs? Yes, but I think many of the countries who used oil as an economic weapon against the world will now suffer from their own greed.

[becks]

tmar10..... I tend to agree with you. I just hope it is not wishful thinking only. But then all we can do is hope.

[Ottawa]

You are wrong on the Oil Sands break even point for new oil. It is closer to $50 US. Nearly all of the planned expenditures have now been canceled because of the low price.

[tmar10]

Hello Ottawa,

I went back and reviewed my sources for the cost of producing a barrel of oil though the bitumen mining process and found numbers all over the spectrum. Most stated the current price per barrel needed to to be at or above $40 US to maintain profitable operations but also stated economies of scale should bring down long run average costs for Canadian oil sands.

The $15 figure was at the very low end and probably wishful thinking by the auther and I stand corrected.

[OldHiker]

Not sure why everyone is complaining, here in Orange County, NY, gas hasn't fallen below $1.89!

Say Merry Xmas and a Happy New Year!

[tmar10]

No complaining here, I plan to top off the bounder tomorrow for less than $1.55/gallon. A far cry from $3.89 earlier in the year.

[RustyJC]

If one really wants to understand what's going on in the gasoline versus diesel market, I'd suggest reading THIS ARTICLE that appeared in today's (Dec 30th) edition of the Houston Chronicle. An excerpt:
<BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">A drop of more than $100 a barrel in oil prices in recent months has lowered regular gasoline prices, but global demand and tighter supplies have kept diesel prices high. </div></BLOCKQUOTE>

Rusty