Better Fill up today

[Mom70x7]

They are accurate, as far as I know. Went to Wichita yesterday - gas prices there were running $1.72 to $1.75 a gallon, with one place in Andover selling for $1.69 cash only.

[Warph]

Increase In Federal Gas Tax On The Table Instead Of A Federal Tax On Green Energy

(The Feds need to release control of the purse strings for the interstate highways, let the states keep the revenue and disperse the funds as needed.  The RINOs have become Jimmy Carter and his 55 MPH speed limit.  Why the heck do Hawaii and Alaska have interstate highways?  Quick answer, it's for the pork and returning money back to the states...)

Via Washington Examiner
http://www.washingtonexaminer.com/increase-in-federal-gas-tax-on-the-table/article/2558461?custom_click=rss

Lawmakers on both sides of the aisle say raising the gasoline tax for the first time in more than 20 years to shore up the insolvent federal Highway Trust Fund is possible this year.

The reasons for the interest in raising the gas tax are twofold: The Highway Trust Fund, which pays for fixing the nation's roads and bridges, is in dire shape — it took a $9.7 billion transfer from the general Treasury to keep it operating through fiscal 2014 — and plummeting oil prices have lowered pump prices to an average of $2.17 per gallon nationwide, according to the AAA motor club.

Republicans, while not explicitly endorsing an increase in the gas tax, for the first time in years have said that it's a legitimate option. The current highway funding bill expires at the end of May, and congressional leaders say they're determined to avoid another short-term patch.

"I don't think we take anything off the table at this point," Sen. John Thune, R-S.D., said last week on "Fox News Sunday," noting the fund faces a severe shortfall. The Congressional Budget Office projected the fund would be $120 billion in the hole in 2024.

[Warph]

Boom Goes The Dynamite:

The Crashing Price Of Oil Is Going To Rip The Global Economy To Shreds

By Michael Snyder, on January 12th, 2015

If you were waiting for a "black swan event" to come along and devastate the global economy, you don't have to wait any longer.  As I write this, the price of U.S. oil is sitting at $45.76 a barrel.  It has fallen by more than 60 dollars a barrel since June.  There is only one other time in history when we have seen anything like this happen before.  That was in 2008, just prior to the worst financial crisis since the Great Depression.  But following the financial crisis of 2008, the price of oil rebounded fairly rapidly.  As you will see below, there are very strong reasons to believe that it will not happen this time.  And the longer the price of oil stays this low, the worse our problems are going to get.  At a price of less than $50 a barrel, it is just a matter of time before we see a huge wave of energy company bankruptcies, massive job losses, a junk bond crash followed by a stock market crash, and a crisis in commodity derivatives unlike anything that we have ever seen before.  So let's hope that a very unlikely miracle happens and the price of oil rebounds substantially in the months ahead.  Because if not, the price of oil is going to absolutely rip the global economy to shreds.

What amazes me is that there are still many economic "experts" in the mainstream media that are proclaiming that the collapse in the price of oil is going to be a good thing for the U.S. economy.

The only precedent that we can compare the current crash to is the oil price collapse of 2008.  You can see both crashes on the chart below...

Price Of Oil Since 2006

If rapidly falling oil prices are good economic news, that collapse should have pushed the U.S. economy into overdrive.

But that didn't happen, did it?  Instead, we plunged into the deepest recession that we have seen since the Great Depression.

And unless there is a miracle rebound in the price of oil now, we are going to experience something similar this time.

Already, we are seeing oil rigs shut down at a staggering pace.  The following is from Bloomberg...


U.S. oil drillers laid down the most rigs in the fourth quarter since 2009. And things are about to get much worse.

The rig count fell by 93 in the three months through Dec. 26, and lost another 17 last week, Baker Hughes Inc. data show. About 200 more will be idled over the next quarter as U.S. oil explorers make good on their promises to curb spending, according to Moody's Corp.

But that was just the beginning of the carnage.  61 more oil rigs shut down last week alone, and hundreds more are being projected to shut down in the months ahead.

For those that cannot connect the dots, that is going to translate into the loss of large numbers of good paying jobs.  Just check out what is happening in Texas...

A few days ago, Helmerich & Payne, announced that it would idle 50 more drilling rigs in February, after having already idled 11 rigs. Each rig accounts for about 100 jobs. This will cut its shale drilling activities by 20%. The other two large drillers, Nabors Industries and Patterson-UTI Energy are on a similar program. All three combined are "likely to cut approximately 15,000 jobs out of the 50,000 people they currently employ," said Oilpro Managing Director Joseph Triepke.

Unfortunately, this crisis will not just be localized to states such as Texas.  There are tens of thousands of small and mid-size firms that will be affected. 
The following is from a recent CNBC report...

More than 20,000 small and midsize firms drive the "hydrocarbon revolution" in the U.S. that has helped the oil and gas industry thrive in recent years, and they produce more than 75 percent of the nation's oil and gas output, according to the Manhattan Institute for Policy Research's February 2014 Power & Growth Initiative Report. The Manhattan Institute is a conservative think tank in New York City.

A sustained decline in prices could lead to layoffs at these firms, say experts. "The energy industry has been one of the job-growth areas leading us out of the recession," said Chad Mabry, a Houston-based analyst in the energy and natural resources research department of boutique investment bank MLV & Co. in New York City. "In 2015, that changes in this price environment," he said. "We're probably going to see some job losses on a fairy significant scale if this keeps up."

If the price of oil makes a major comeback, the carnage will ultimately not be that bad.

But if it stays at this level or keeps going down for an extended period of time, it is inevitable that a whole bunch of those firms will go bankrupt and their debt will go bad.

That would mean a junk bond crash unlike anything that Wall Street has ever experienced.

And as I have written about previously, a stock market crash almost always follows a junk bond crash.

These are things that happened during the last financial crisis and that are repeating again right in front of our eyes.

Another thing that happened in 2008 that is happening again is a crash in industrial commodity prices.

At this point, industrial commodity prices have hit a 12 year low.  I am talking about industrial commodities such as copper, iron ore, steel and aluminum.  This is a huge sign that global economic activity is slowing down and that big trouble is on the way.

So what is driving this?  The following excerpt from a recent Zero Hedge article gives us a clue...

Globally there are over $9 trillion worth of borrowed US Dollars in the financial system. When you borrow in US Dollars, you are effectively SHORTING the US Dollar.

Which means that when the US Dollar rallies, your returns implode regardless of where you invested the borrowed money (another currency, stocks, oil, infrastructure projects, derivatives).

Take a look at commodities. Globally, there are over $22 TRILLION worth of derivatives trades involving commodities. ALL of these were at risk of blowing up if the US Dollar rallied.

Unfortunately, starting in mid-2014, it did in a big way.

This move in the US Dollar imploded those derivatives trades. If you want an explanation for why commodities are crashing (aside from the fact the global economy is slowing) this is it.

Once again, much of this could be avoided if the price of oil starts going back up substantially.

Unfortunately, that does not appear likely.  In fact, many of the big banks are projecting that it could go even lower...

Goldman Sachs, CitiGroup, Societe General and Commerzbank are among the latest investment banks to reduce crude oil price estimates, and without production cuts, there appears to be more room for lower prices.

"We're going to keep on going lower," says industry analyst Brian Milne of energy manager Schneider Electric. "Even with fresher new lows, there's still more downside."

OPEC could stabilize global oil prices with a single announcement, but so far OPEC has refused to do this. 

Many believe that the OPEC countries actually want the price of oil to fall for competitive reasons...

Representatives of Saudi Arabia, the United Arab Emirates and Kuwait stressed a dozen times in the past six weeks that the group won't curb output to halt the biggest drop in crude since 2008. Qatar's estimate for the global oversupply is among the biggest of any producing country. These countries actually want — and are achieving — further price declines as part of an attempt to hasten cutbacks by U.S. shale drillers, according to Barclays Plc and Commerzbank AG.

The oil producing countries in the Middle East seem to be settling in for the long haul.  In fact, one prominent Saudi prince made headlines all over the world this week when he said that "I'm sure we're never going to see $100 anymore."

Never is a very strong word.

Could there be such a massive worldwide oil glut going on right now that the price of oil will never get that high again?

Well, without a doubt there is a huge amount of unsold oil floating around out there at the moment.

It has gotten so bad that some big trading companies are actually hiring supertankers to store large quantities of unsold crude oil at sea...

Some of the world's largest oil traders have this week hired supertankers to store crude at sea, marking a milestone in the build-up of the global glut.

Trading firms including Vitol, Trafiguraand energy major Shell have all booked crude tankers for up to 12 months, freight brokers and shipping sources told Reuters.

They said the flurry of long-term bookings was unusual and suggested traders could use the vessels to store excess crude at sea until prices rebound, repeating a popular 2009 trading gambit when prices last crashed.

The fundamentals for the price of oil are so much worse than they were back in 2008.

We could potentially be looking at sub-$50 oil for an extended period of time.

If that is indeed the case, there will be catastrophic damage to the global economy and to the global financial system.

So hold on to your hats, because it looks like we are going to be in for quite a bumpy ride in 2015.

[frawin]

THE WTI CRUDE FUTURES TODAY OPENED AT $29.64, PHILLIPS POSTING FOR WTI CRUDE IS $25.66, WTS is $23.23. I filled up at Market Street, it is a Popular Grocery Chain here, if you get a Market Street Card, you save BIG on EVERYTHING. I filled up yesterday, I filled with Regular Gas, the Regular Pump Price was $1,59 at Market Street, with my Discount it was $1,39. At one of the local Valero Stations it was $1,69 that is a saving of 30 cents a gallon, I WILL TAKE THAT ANY DAY.. When Oil Prices got $50.00 to $60.00 Regular Gasoline was Twice as High as it is now, The big drop in Oil Prices is Because when Oil got so REALLY HIGH and Drilling was at a VERY FAST PACE, there was far more Oil for the refiners, than they needed. In addition, with all of the New Crude coming on, the OPEC Members, Mainly the Saudis could not sell their Crude to the US Refiners. The Saudis have made the Statement that they will hold the Price down and Drop it in the Future EVER TIME US drilling picks up and keeps them out of the Market. In the CRUDE SUPPLY WORLD, WHAT THE SAUDIS WANT THE SAUDIS GET. WE NEED RONALD REAGAN, when he was first elected I was Area Crude Oil Supply Director For Phillips Petroleum in Midland Texas, at that Time Crude Oil was $39.00 a Barrel, by 1986 it was down to $9.00 a Barrel. When I started with Phillips in 1970, Oil at the Lease was $2.70 a Barrel, since then it has been as High as $150.00 a Barrel that is a Spread of $147.00. WOW that does not seem possible, but it happened. Well I need to get to work, I still market Crude Oil and Natural Gas for some West Texas Operators. My company Name is PetroMark Services. I enjoy, the contact with Oil Operators, and besides it, KEEPS ME OUT OF MYRNA'S HAIR.

[Jane]

So Frank, if we have a surplus of our own oil why are we still buying from the Saudis? Why in the world buy from someone else when we do not need to.

[frawin]

Jane, the Major Refiners well remember the OPEC Embargo Days when they did not have enough oil to Run Their Refineries at Full Capacity. There is a Surplus of Domestic Oil now, but that can change. There are More Cars, and Tractor Trailer Rigs on the Road today that ever before in History and more being added everyday. The price of oil at the lease today was in the $30.00 range. Listed below is the YEAR, Price at the Lease and the price adjusted for inflation.
YEAR         PRICE AT THE LEASE           PRICE AJUSTED FOR INFLATION
1946                 $1.63                                        $19.41
1957                 $3.14                                        $26.38
1970                 $3.39                                        $20.63
1980                 $37.42                                      $107.36       
2013                 $91.17                                      $92.40                                               
This gives you an idea how Oil Prices have Bounced around over the years. There is no doubt in my mind that Oil will go up and down as it always has, and the available supply will Fluctuate. There is a lot of talk about Vehicles that do or will burn little or no Petroleum Based Fuels, that is probably coming, but it will be a LONG TIME before there are very many on the road. My Grandchildren and Great Grandchildren will see it but not Myrna and I and Probably you and Rex won't. Stop and see us in Prosper, you can drive my 1929 Model A and my 1957 T Bird, and I will fill you up with Gas and Myrna will fill you up with Food.

[Delbert]

Oil you buy for your vehicle doesn't seem to have gone down like the price of gas.

[Bullwinkle]

        Frank, do you know when they put a stop to the pumpers dumping the salt water from the gun barrel out on the ground? A lot of the old tank batteries have severe erosion around them caused by it.

[frawin]

Bull they were still doing it when I left Howard in 1965. I went to work for Phillips in 1970 Traveled All over the World until 1980 and then Took a Job with Phillips in Midland Texas as Crude Oil Supply Director. The Texas Railroad Commission made all of the rules regarding Trucking and Transportation of all kinds Pipelines etc. It was a Big Fine on The Operator if they caught anyone Contaminating the Surface around any Tank, Pipeline Connection or anywhere on a Lease PERIOD.

[frawin]

Bull I should have added that there are Big Areas in West Texas that are totally Barren from Saltwater that was run out on the Ground. Those areas will be Barren until the end of Time. Fortunately the Texas RRC does a great Job of Checking the Tank Batteries and Pipelines. Being from Rural Kansas it makes me so sad to see  all of the Polluntion caused by the Stupidity and Careless Pollution caused by Saltwater and Oil Leaks. I worked on Drilling Rigs in Elk County in the Early 60s and unfortunately there was a lot of Damage caused by the Slush Pits that were made for Recirculating the drilling Mud or Fluid. Some of the old timers might Remember JR Wap Fester, I was a Floor Hand on his Rig it was in terrible Condition, we had to use a long piece of Pipe to stand on to hold the Brake while we added another Joint of  Drill Pipe. I also Worked on Mendenhalls Rigs and they were First Class. In fact I was Working on one of Mendenhalls Rigs in Northeren Kansas when I called My Wife of 52 GREAT YEARS and told her I was  coming home to Howard and we were getting Married.