Oil, Oil, Swimming in Oil

April 7, 20161 Comment

I remember in high school when my track coach Mr. Barnes “Barney” asked me and my best friend Bobby (our teams most excellent pole vaulter) to go get gas for his Honda Civic. Huh? We said: “uh? sure thing coach!” Wait?… Was our hard-nosed disciplinarian coach letting us off the hook on our 100 yard wind sprints and 440’s?  This was some kind of dream come true! Then we drove to the gas station. There were cars everywhere – hundreds of them! What was going on? The line of cars was at the gas station was around the block, you couldn’t even SEE the gas station by the time we found the end of the line. We waited an hour and a half in that line to get gas! Some cars ran out of gas while idling in line and their owners were pushing their cars in the line. It was crazy! I wasn’t sure if this was a good deal after all.

1024px-Line_at_a_gas_station,_June_15,_1979

Ah the good ol’ days, but I’m sure glad they are over now. Well now that OPEC no longer has control over the price of gasoline, but wait? Back then they were cutting the supply of oil and now they are pumping as much as they can and we are swimming in it. It’s craziness all over again!

Back In February four major oil producing countries agreed to freeze (not cut) oil production levels, since then oil prices have moved up on these words but not actions. On April 19th many more OPEC and non-OPEC oil producing countries representing 73% of the worlds oil production have agreed to meet (it was scheduled for March 20 but got pushed back) to discuss the over production problem. 1.5 million barrel’s of oil in excess of demand is produced EVERY DAY and added to storage. The available storage is actually near capacity, which is another problem, there are full tanker ships just moving around from port to port waiting in long lines to unload the oil from their ships. Long lines hummm that sounds familiar.

The outcome of that meeting will likely have a sharp move either up or down based on what agreements (or no agreements) are made. However, it’s all words even OPEC countries had all kinds of production agreements and most of the countries would cheat most of the time and produce more then their agreements. The OPEC “cartel” became a joke because they broke more agreements then they kept. So until we actually get action and real numbers it is hard to say what will some of these meetings, but the oil patch will be interesting to follow the next few weeks. This will likely increase the volatility of the overall market for possible dips.

Here are some articles and videos regarding the future of oil prices that I found interesting:



Filed in: Stock Market

Comments (1)

Trackback URL | Comments RSS Feed

  1. FerdiS says:

    My folks bought a 19′ long Chrysler Plymouth in 1971. We had a great time criss-crossing the US with a popup trailer in tow, increasing the total length to about 35′. The car was a gas guzzler and not the most pleasant vehicle to own when the oil crisis hit in 1973.

Leave a Reply

Back to Top

Password Reset
Please enter your e-mail address. You will receive a new password via e-mail.