Big Red Car here with gasoline prices in the ATX now at a low of $1.69/gallon at Sam’s Club in South Austin where it was about $1.49/gallon less than two months ago. It’s all about the price of oil. Wow!
Still, that is historically cheap.
Big news in the last few days out of Doha — the OPEC + Russia countries were unable to agree to freeze oil production at current levels through the end of 2016.
The fly in the ointment?
You guessed it — Iran.
Iran and Oil
The Iranians, those normally cheery and cooperative chaps, are just now returning to the world oil markets (courtesy of those shrewd negotiators at the White House) and want to ramp their production up as quickly as they can to earn dollars (the entire oil business settles its business in dollars) and thereby be able to regain a footing in world energy and financial markets.
The Iranians are not going to agree to maintain their production at current levels. The Saudis, the drivers of this entire body of thought, know this and they are not going to agree to anything without making the Iranians toe the same line.
Hope everyone had a good time in Doha cause you didn’t actually do anything.
It is a classic impasse.
The world needs to know that this impasse will not last forever. It will NOT last forever and thus the United States should be moving aggressively to gain true energy independence. Alas, that will not happen in an Obama administration which takes seven years to make a decision — a pre-programmed decision, cynics might say — on such things as the Keystone XL pipeline which would have brought a million barrels per day of energy independence into the US from Canada.
Big Red Car predicts we have seen the low in oil and it ended right where the Big Red Car said it might. Now, it is the Big Red Car’s view that oil will stay where it is and might even decline a bit but then it is headed to $60/barrel in mid to late 2017.
Unless, the US gets its act together on a national energy plan.
Know this, if the OPEC + Russia chaps get their act together, it will have a huge impact on prices. Plain, old fashioned cartel strangulation. These guys are huge. We need to get out from under their shadow for energy and national security reasons.
One last point, if I may. You do know that the low oil/gasoline prices are the only really good thing about our current economy. Right? I’ve told you that, right?