U.S. oil prices dropped below $75 per barrel for the first time in more than three years, due to a boom in shale gas production and a decline in global demand. A slowing growth rate in China, among other places, has also tempered demand.
While lower gas prices are good for consumers at the pump, they’re not so good for jobs in states with oil and gas reserves across the Midwest. CCTV America’s Ginger Vaughn reported this story from Houston
In Texas, the price of oil company stocks have declined along with gas prices. Some industry analysts have said oil-producing states including Texas, Oklahoma, and North Dakota, can expect leaner times ahead.
“It will certainly result eventually to less wells begin drilled, less business for the service companies, that will eventually lead into less jobs in that sector,” said Chris Ross, a professor at the University of Texas’s Bauer College of Business.
The fighting in Iraq helped drive up the price of West Texas Intermediate crude, one of the world’s benchmark oil prices, to around $107 a barrel in June. Since then, prices have fallen more than 40 percent.
U.S. oil production still climbed to its highest level in three decades, and there’s no slowdown in sight. Meanwhile, Organization of the Petroleum Exporting Countries, or OPEC, members have shrugged off calls to cut production and slashed export prices to the U.S. instead.
Despite the plunge in prices, companies haven’t cut production. Several government and industry reports argue that prices will have to drop another 10-15 percent from where they are today, to around $60 a barrel, before producers start to scale back even a little.
The result is an oil glut that has driven down share prices in the energy sector. Professor Ross advised that consumers enjoy it while they can, because the prices may not stay this low for long.
“If the lower price, low oil prices lead to an improvement to the international economy, potential for demand recovery is quite strong,” said Ross. “So I wouldn’t see this as a one-year or maximum two-year lull in prices.”
Industry analysts said the continuing slump in oil prices appears to reflect a consensus view among traders and investors that OPEC producers won’t be cutting their output when they meet in Vienna later this month.
U.S. oil prices at lowest level in three yearsU.S. oil prices dropped below $75 per barrel for the first time in more than three years, due to a boom in shale gas production and a decline in global demand. A slowing growth rate in China, among other places, has also tempered demand.
Richmond, Virginia has some of the lowest gas prices anywhere in the U.S. Even so, some of the benefits are offset by soaring prices in other commodities. CCTV America’s Owen Fairclough reported this story from Richmond, Virginia.
Howard Brown delivers up to 500 boxes of locally grown produce a week around Richmond, and his annual fuel bill can hit $15,000 a year.
Richmond is currently enjoying some of the lowest gasoline prices in the United States.
“If the fuel prices stay where they are, then it makes us less worrisome about opening up new zip codes and new territory because that’s how our business grows,” said Brown.
Fuel prices represent just a few cents on the price of a $40-$50 box of produce for Brown. He’s more concerned about swings in the wholesale prices of his produce.
“I would say tomatoes would be the first thing,” said Brown. “From 2009-2010 to now they’re probably double.”
Gasoline prices in Richmond are currently as low as 62 cents a liter. In Canada and even China, they’re about double that. Yet while those prices might be good for consumers in the U.S., they’re not falling as far or fast as they did at the end of 2008 when the global financial crisis struck.
Nevertheless, consumers at the cheapest gas station in the city know these are good times to fill up. At Dominion Harvest, staff have already started planning for next year’s crop.
Global oil prices are expected to drop even more in the early part of 2015.
Lower fuel prices aid some businessesRichmond, Virginia has some of the lowest gas prices anywhere in the U.S. Even so, some of the benefits are offset by soaring prices in other commodities. CCTV America's Owen Fairclough reported this story from Richmond, Virginia.
Solar energy has been undergoing something of a quiet revolution. After years of subsidies, it’s finally standing on its own two feet. According to a new report by Deutsche Bank, solar energy is expected to be as cheap or cheaper than conventionally generated electricity in most U.S. states over the next couple of years.
CCTV America interviewed Stefan Heck, a renewable energy expert, that predicted this revolutions years ago.