With gas prices headed lower across the US and west Texas crude at 85$ per barrel, how low do you think gas prices will go this winter? I predict the national average will drop below 3$ per gallon and am hoping local prices in Illinois will be down to 2.75$ at some point this winter.
The government has ok'ed oil companies classifying the shale oil as a petroleum product as opposed to crude. So the over supply of it that now exists can now be sold on the world market. I think the dropping gas prices will level off soon because of this.
I just saw gas for $2.999 yesterday in Nebraska. But only at one station. Most of it seems to be running $3.049 to $3.199 (for E-10). Non-ethanol is about 20 cents higher.
I had been looking casually at the idea of a smaller, more economical vehicle to use when my pickup is overkill. Trouble is, the tax and insurance on that extra vehicle would run about a thousand dollars a year. Yes, I'd save fuel. But no, I wouldn't save money.
The Bakkan shale oil is a light, sweet crude once it is processed to be shippable. The Gulf coast refineries where most it goes are designed to handle heavy crude from South America. They don't want the shale oil, but take it for less than the average price per barrel, which is what the news report quote oil prices. It could be as low as $20 under per barrel that they pay for it, and the shale oil producers are unwilling to reduce output.
Now that they can start exporting the shale oil, the Japanese will gladly buy it for greater than average barrel price. It will be cheaper than what OPEC charges them. Then all the shale oil will go overseas, and refineries here won't have an undermarket value crude to reduce costs with.
It looks like we'll see $3 gas here, but this is also winter blend which is made with some cheaper factions from the crude. The effects of allowing shale oil being exported aren't in effect yet. They will be by summer time when the more expensive gasoline is made.
I was just out driving the bus today (10/15/14) and saw gas for $2.959 at three or four stations. Diesel seems to be running about $.50 higher than gasoline, which largely offsets any saving due to better fuel mileage.