Gulf Oil CEO Predicts $1 a Gallon Gasoline

That's right, a dollar a gallon for unleaded and a barrel of crude for 20 bucks! Gulf Oil CEO, Joe Petrowski said that we could see see these prices early next year. Just as we watched prices skyrocket to $147.27 a barrel this past summer we are now watching them plummet, "there is a chance the market will overshoot on the way back down," resulting in much lower prices at the pump, Petrowski said during a talk in Newton, Mass.

From the Pittsburgh Tribune-Review:

"Petrowski said that oil, which settled at $37.90 a barrel today, may fall to $20 a barrel. Average gasoline prices nationwide slipped under $1.60 a gallon yesterday, a four-year low.

Just four months ago, crude oil prices shot close to $150, and the average, per-gallon cost to consumers was more than $4. Crude has fallen nearly $27 in one month.

Petrowski became Gulf's CEO in 2005 after more than 20 years with other energy companies. He correctly predicted on Oct. 14, 2007, that oil, then trading at $83.69 a barrel, would rise to $100 within six months.

He said the price of oil should range from $40 to $60 a barrel, depending on economic activity, in order to keep pace with inflation."

I remember reading articles last summer that declared unequivocally we h43.67ad seen the end of 60 dollar a barrel gasoline. Here we are, talking about gasoline at one third that price. Guess the self proclaimed experts are anything but.

Most importantly, what does this mean for our country's efforts to become more oil free? I am afraid that $1 a gallon gasoline will weaken our resolve to build and buy alternative energy vehicles.

Crude Oil prices fall after Fed announcement

The price of light, sweet crude for January delivery fell about 91 cents, or 2 percent, lower to $43.60 per barrel on the New York Mercantile Exchange. Immediately after the Fed announcement, prices dipped as low as $42.70 per barrel.

The Federal Reserve announced yesterday that it is cutting its interest rate for interbank lending from 1 per cent to between zero and 0.25 per cent. At this point, there is obviously no more cutting left and this was considered a very bold move by many. With the rate cut, the Fed also said that economic conditions "are likely to warrant exceptionally low (rate) levels for some time." Since there is no more room left to cut, the Fed will now have to act through "quantitative easing", which means they will add to the money supply in the form of loans to spur the credit markets, etc.

Meanwhile, OPEC has agreed to a production cut of 2 billion barrels per day, which analysts believe is the necessary reduction for the current lowered demand. While these analysts are probably correct, OPEC is more interested in halting the decline in value of a barrel of oil and cutting the supply usually is a good counter measure.

How low will the price of a barrel drop? Have we hit bottom? In the United States it looks like it will be some time before the economy can be turned around and I foresee demand falling even lower and prices at the pump getting smaller. Regular unleaded in central Ohio this week is around $1.53 per gallon. What is it in your neck of the woods?

A Look at US Oil Consumption

Today I would like to have a look at the history of US oil consumption and use. It is interesting what has happened as recently as the year 1990. First, here is a graph of total US oil consumption, production and imports:


This is a pretty nifty chart that shows our increasing use of oil, basically quadrupling since 1950, as well as the US production numbers versus the import figures. According to the chart, around 1965 or so, the US needed to import about 25% of the total oil needed per year. Zooming up to the year 2007, we can see that the numbers have been reversed and that we need to import fully 75% of our oil needed every year. Here is another graph that just shows the crude oil imports:


This is a disturbing image showing the linear rise in imports ever since 1984. Obviously, this trend has got to cease and one of the best ways I know is to end our dependence on gasoline fired internal combustion engines. Roughly 15 million barrels of oil DAILY could be saved if our entire fleet ran independent of gasoline. We could almost live on US oil production alone if our vehicles ran on electricity or natural gas or ethanol or bio-diesel. Think about it.

Gas and Crude Prices

Today, in central Ohio, regular unleaded is selling for $1.79 a gallon. Personally, I never thought that I would see prices this low and they may fall even lower. With the economy in such turmoil and people cinching their belts and purse strings, demand will lessen further. How low will the price of gasoline fall in the US?

From Alternative and Saving Energy:

"Oil prices sank under 55 dollars a barrel on Tuesday to strike a 21-month low as fresh recession jitters fanned fears about slowing global energy demand, traders said.

On London's InterContinental Exchange (ICE), Brent North Sea crude for delivery in December plunged to 54.92 dollars per barrel -- a level last seen on January 30, 2007. Brent later stood at 55.94 dollar, down 3.14 dollars from Monday.

At the same time, on the New York Mercantile Exchange (NYMEX), light sweet crude for December tumbled to 58.32 dollars, the lowest level since March 21, 2007. The contract was later down 2.91 dollars at 59.50 dollars.

Prices have now shed about 60 percent since scaling historic highs above 147 dollars in July on mounting evidence of slowing global economic growth and energy demand."

While these low prices are great for my wallet, they are not so great for weaning the world off nasty oil. These low prices further compound our cause because of the auto manufacturer crisis. It is like a double whammy. We need oil free vehicles now but low cost gasoline combined with bankrupt manufacturers makes for a grim outlook on the future. I feel that we need a bailout package that forces the major players to produce alternative fuel vehicles.

What is the price of unleaded gas in your neighborhood?