Gasoline and oil prices are fairly straightforward this year. Supply is up, demand is down and those factors are not going to change much for awhile, yet they WILL change due to structural realities. What that means is when prices fall, so do profits, when profits fall companies cut back on finding more oil . There is no sense in spending money you don’t have, to find or develop something that doesn’t pay enough to cover the costs of finding it any more.
Another factor that will raise future oil prices is the method being used for extraction. The US is getting all this oil because of fracking. It is a known fact; oil from fracked wells dries up quicker than traditional drilling methods.
Here is how it will play out: the US will enjoy lower oil prices which will give our economy a boost. As the economy keeps growing from cheap energy, oil and natural gas consumption goes up. As oil and gas consumption rises, so do prices. Once the wells start to run low, prices shoot up even more. However, once those wells start to go dry, our supply of domestic oil is nearly gone, there is no plan B for more oil. However, there better be an alternative at that point to fuel our country, because at that point, oil imports will be even more expensive since demand will be so high for what is left of world oil supplies. Our country could face a great depression if there is no cheap, readily available alternative for energy, at that critical time.
Going back to the short term. Those who are heating with oil this Winter should enjoy lower than normal heating bills However, those who heat with natural gas are facing the unknown. There are 3 things that are going to effect the price of natural gas this Winter;
1)Storage, 2)Pipelines 3)Weather
Storage.. we are starting this heating season with supplies that are lower than at this time last year. Pipelines.. there are not enough pipelines to meet demand, so if we have another energy intensive, very cold Winter, natural gas prices will naturally rise.
Tired of shifting energy prices that continually take money from you? Check out the section, ‘For the House’ and see how solar electric and or geothermal can keep more money in your wallet.
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