Monday, December 08, 2014 1:25:04 PM
$2 gas is back!
So, what's the deal? There are a range of factors keeping fuel prices low, but two stick out:
1. We're in the middle of "winter gas" season. "Winter gas" -- technically, just "gas" -- is easier to produce than "summer gas", which is required by law to contain more additives so that it burns more cleanly and efficiently in hot weather. That makes winter gas comparatively cheap, but that's just part of the explanation for today's low fuel prices.
When refineries switch from one type of gas to the other, they scale back on the outgoing version to ensure that they can sell all of the inventory they have. Those slowdowns in production cause artificial shortages, which cause prices to spike -- usually around May and September. Now, in December, we're well into the cheaper winter gas season, and the summer gas changeover is a long way off, so prices are very low.
2. Oil production in the U.S. is booming. Thanks to new extraction techniques, the U.S. is experiencing a golden age of oil production. While we still depend on imported oil for some of our supply, the country now produces enough gas and diesel to be a net exporter.
http://www.washingtonpost.com/business/2-gas-is-back-is-that-good/2014/12/08/75d7df10-7ef9-11e4-b936-f3afab0155a7_story.html
So, what's the deal? There are a range of factors keeping fuel prices low, but two stick out:
1. We're in the middle of "winter gas" season. "Winter gas" -- technically, just "gas" -- is easier to produce than "summer gas", which is required by law to contain more additives so that it burns more cleanly and efficiently in hot weather. That makes winter gas comparatively cheap, but that's just part of the explanation for today's low fuel prices.
When refineries switch from one type of gas to the other, they scale back on the outgoing version to ensure that they can sell all of the inventory they have. Those slowdowns in production cause artificial shortages, which cause prices to spike -- usually around May and September. Now, in December, we're well into the cheaper winter gas season, and the summer gas changeover is a long way off, so prices are very low.
2. Oil production in the U.S. is booming. Thanks to new extraction techniques, the U.S. is experiencing a golden age of oil production. While we still depend on imported oil for some of our supply, the country now produces enough gas and diesel to be a net exporter.
http://www.washingtonpost.com/business/2-gas-is-back-is-that-good/2014/12/08/75d7df10-7ef9-11e4-b936-f3afab0155a7_story.html
My post is for my entertainment, do your own DD before pushing your
buy/sell buttons
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