November 4,2014 –
Midway Sunset oil has dropped in price to $73.52 a barrel as of November 3, a decline of around 30% from this summer’s high when it was $104 per barrel.
(they fell further to $72.18 posted Nov 4)
It was over $120 a barrel as recently as 2012. Midway Sunset from California’s largest oilfield, tends to follow the WTI crude oil price which has fallen to the high $70s this week on abundant US and world supplies. Chevron posts the price of oils by origin they sell on a daily basis with oil from fields in the Midwest today with several in the low $60s.
Reacting to low prices worldwide Saudi Arabia said they too would lower the price of their crude this week. US production ha surged in recent years and in October the US produced more oil than Saudi Arabia,the first time that has happened in 40 years.
With the Saudi’ s move some speculate that the country with the largest oil reserves is now ready to go even lower to squeeze US production.
One causality has been the decline in the value of the Canadian dollar down today to around $87.63 vs the US dollar.
The increasing value of the US dollar is said to be pushing down oil prices.
A recent Motley Fool report says”Bakken shale producers have spent the past few years investing billions of dollars to push North Dakota to new oil production records. That is likely to change in 2015 as plunging oil prices should cause producers to cut back on investing in exploration for new sources of oil. In fact, according to a recent Bloomberg report, producers already expect capital spending to be flat in 2015 rather than the previously anticipated 5%-10% growth. And if oil prices continue to fall so will capital spending.”
Lower prices may be good for businesses, farms and consumers, even in California enjoying $3 a gallon gas at the pump – but it could also mean job layoffs in Kern County and a drop in property values there and the rest of the state’s oil patch.
The Bakersfield Californian reported last month that some oil industry reps are concerned
“Kern’s Excalibur Well Services Corp. hasn’t experienced any slowdown related to the price drop, Vice President Gordon Isbell said. But he offered a guess as to exactly what level oil prices would have to drop to, and remain for a month or more, before triggering a pullback that would claim maybe 20 percent to 30 percent of local oil field jobs.
“If you see oil get down to $65 (per barrel) … I think that’s going to be probably the shakeout number right there,” he said. For conventional wells that don’t require enhanced stimulation, he estimated the trigger at $45 or $50 per barrel.”
The Midway Sunset oil field in western Kern has been in slow decline in recent years with production of 28.8 million barrels last year compared to 34.2 million in 2009.
Ironically falling oil prices may quiet the calls for even more drilling even as the GOP increases its power in Washington .The Keystone pipeline project to bring oil from Canada may face a new hurdle with prices below $75. An environmental analysis released by the State Department said oil prices would have to fall to $75 a barrel for Keystone XL to affect development of Canadian heavy crude. A recent report said” At $75, a government analysis said producers may be discouraged from developing Canada’s oil sands without pipelines like Keystone.”
“It changes the narrative quite a bit,” Anthony Swift, an international lawyer at the Natural Resources Defense Council in Washington, said of the tumble in crude prices.”
The group opposes more crude from Canada because of they say it produces higher greenhouse gas emissions.
“The pace of oil-sands production is key in the debate over Keystone, a Canada-to-U.S. line TransCanada Corp. (TRP) proposed in September 2008 when oil was more than $100 a barrel.”
Today on CNBC oilman T Boone Pickins said “Stop Drilling” to the industry.What happened to ‘Drill Baby Drill?’,Another guest predicted gas prices nationwide will fall to $2.50.
The US EIA reported in October that motor gasoline consumption grew by 160,000 bbl/d (1.9%) in 2013, the largest increase since 2004. But consumption of that fuel falls by 20,000 bbl/d (0.2%) in 2014 and by a further 20,000 bbl/d in 2015 as improving fuel economy in new vehicles offsets highway travel growth.