Isn’t it just great, the price of gasoline continues to drop like a rock? Oil (WTI) futures market has settled into the mid-$50 range and are expected to stay low for quite some time. The RBOB futures (Jan 15) price has now dropped to $1.53,see my story on the price of gasoline.
So now there is another problem, what to do with all the oil and gas being produced and no place to put it. How big is the problem? In the week ending December 5th US inventories of crude oil and gasoline rose by 15.3 million barrels, the expected amount was only 800,000 barrels. The US now produces almost 9 million barrels of oil per day, and 80% increase in just the last 6 years.
OPEC oil producers, especially the Saudi’s account for about 40% of worldwide production and are loading up their oil into all the available tankers and sending them out to sea. We now have millions of gallons sloshing around with nowhere to go. Much of this is being stored in hopes that there is a quick fix to the low price dilemma the producers face. Here in the US producers have already maxed out tank storage and are filling up rail cars. China has been taking advantage of this reduction and is also stockpiling all the oil they can.
On a temporary basis this is probably fine, but pretty soon we’ll run out of rail tank cars, ships and storage facilities.
Any suggestions on where to put all of this “liquid gold”?