News about BP ( the former British Petroleum ) is everywhere since the disastrous Gulf of Mexico oil well explosion and resultant millions of barrels of oil spilled into the Gulf since June affecting the livelihoods of Louisiana, Alabama, Mississippi, and Florida residents, businesses, and workers. The recently capped well has slowed the spilling but the impact and clean up will likely go on for years.
BP ( www.bp.com ) issued a press release today noting they have already paid out $256 million in claims and have set aside 30 plus billion dollars for clean up, restoration of the Gulf, and further claims. The BP website has much information on it soliciting ideas, help, and providing round the clock access to video feeds on the oil well site. There you will find news of former CEO Tony Hayward stepping down in October 2010 and being replaced by American born and former Louisiana resident Robert Dudley, who is currently in charge of BP's cleanup operations. And there is extensive coverage on the site of BP efforts and responses to the ongoing disaster.
In light of the ongoing Gulf crisis many are wondering about the larger oil situation, namely the effect of the Gulf disaster on gas prices. What has been the effect? What will be the effect in the future? This disaster is not a natural one, such as a hurricane or tornado, but a result of human error, mistakes and lack of foresight to say the least. It is not the result of oil futures speculation that was rampant 2 years ago this month, when gas prices at the pump rose to over $4 a gallon of regular and a barrel of oil rose to $150 and brought about the collapse of the American auto industry.
So what is the effect? The answer is not what one would expect with the loss of so much oil. There has been almost no effect on gas prices. Summer is the season when gas prices generally increase. Not so thus far this year. Gas prices since Memorial Day have changed little, hovering between $2.60 and $2.80 per gallon of regular. See gasbuddy.com's Massachusetts Gas Prices for up to the minute prices in your area. This link provides current Pittsfield area's lowest prices, which are between $2.65 and $2.69 per gallon. Average Massachusetts price is $2.68. And the national average on this day is $2.74. Gasbuddy also displays a barometer measuring the direction of gas prices; currently they are going up.
Why has there been no effect on the market for oil? Future traders who traded up the price per barrel dramatically 2 years ago are laying in wait. So far prices per barrel of oil are less than $80. While prices are increasing, it's very slow, and there has been a surplus of oil. The demand has not been there. That's the lesson of the past 2 years. Consumers have conserved and cut back on their appetite for large gas guzzling cars, are investing in more economy minded cars, and taking shorter vacations. And there has been government pressure on the auto industry to supply cars with higher gas use efficiency. The recession has produced high unemployment, housing foreclosures, and stabilized gas prices.
The continuing Gulf oil crisis demonstrates forcefully the impact of spills on the environment, wildlife, tourism, local businesses, and the overall quality of life. Still oil touches every sphere of life in the global economy. Oil byproducts produce clothing, plastics, electricity. It is a foundation commodity for modern life and is why wars are fought, to control who has access the these resources. Of course, there is the current thrust from government to wean ourselves from dependence on oil, but it is likely that it is economic development and competition between governments such as China, the United States, Japan, and Europe for this resource that will determine our future. And that competition is over oil resources. Ultimately this competition will determine prices and quality of life far more the Gulf oil spill.
Oil companies have seen that the future will depend on more diversified resources such as Natural Gas. Still Exxon Mobil, which has been investing in natural gas, recently announced its 2nd quarter net profit as $7.56 billion, a 91% increase over same quarter in 2009.
So it appears that the Gulf of Mexico crisis has had little effect on oil company profits beyond that of BP, which is still profitable, though weakened.
Gas prices this summer have been remarkably stable.
BP ( www.bp.com ) issued a press release today noting they have already paid out $256 million in claims and have set aside 30 plus billion dollars for clean up, restoration of the Gulf, and further claims. The BP website has much information on it soliciting ideas, help, and providing round the clock access to video feeds on the oil well site. There you will find news of former CEO Tony Hayward stepping down in October 2010 and being replaced by American born and former Louisiana resident Robert Dudley, who is currently in charge of BP's cleanup operations. And there is extensive coverage on the site of BP efforts and responses to the ongoing disaster.
In light of the ongoing Gulf crisis many are wondering about the larger oil situation, namely the effect of the Gulf disaster on gas prices. What has been the effect? What will be the effect in the future? This disaster is not a natural one, such as a hurricane or tornado, but a result of human error, mistakes and lack of foresight to say the least. It is not the result of oil futures speculation that was rampant 2 years ago this month, when gas prices at the pump rose to over $4 a gallon of regular and a barrel of oil rose to $150 and brought about the collapse of the American auto industry.
So what is the effect? The answer is not what one would expect with the loss of so much oil. There has been almost no effect on gas prices. Summer is the season when gas prices generally increase. Not so thus far this year. Gas prices since Memorial Day have changed little, hovering between $2.60 and $2.80 per gallon of regular. See gasbuddy.com's Massachusetts Gas Prices for up to the minute prices in your area. This link provides current Pittsfield area's lowest prices, which are between $2.65 and $2.69 per gallon. Average Massachusetts price is $2.68. And the national average on this day is $2.74. Gasbuddy also displays a barometer measuring the direction of gas prices; currently they are going up.
Why has there been no effect on the market for oil? Future traders who traded up the price per barrel dramatically 2 years ago are laying in wait. So far prices per barrel of oil are less than $80. While prices are increasing, it's very slow, and there has been a surplus of oil. The demand has not been there. That's the lesson of the past 2 years. Consumers have conserved and cut back on their appetite for large gas guzzling cars, are investing in more economy minded cars, and taking shorter vacations. And there has been government pressure on the auto industry to supply cars with higher gas use efficiency. The recession has produced high unemployment, housing foreclosures, and stabilized gas prices.
The continuing Gulf oil crisis demonstrates forcefully the impact of spills on the environment, wildlife, tourism, local businesses, and the overall quality of life. Still oil touches every sphere of life in the global economy. Oil byproducts produce clothing, plastics, electricity. It is a foundation commodity for modern life and is why wars are fought, to control who has access the these resources. Of course, there is the current thrust from government to wean ourselves from dependence on oil, but it is likely that it is economic development and competition between governments such as China, the United States, Japan, and Europe for this resource that will determine our future. And that competition is over oil resources. Ultimately this competition will determine prices and quality of life far more the Gulf oil spill.
Oil companies have seen that the future will depend on more diversified resources such as Natural Gas. Still Exxon Mobil, which has been investing in natural gas, recently announced its 2nd quarter net profit as $7.56 billion, a 91% increase over same quarter in 2009.
So it appears that the Gulf of Mexico crisis has had little effect on oil company profits beyond that of BP, which is still profitable, though weakened.
Gas prices this summer have been remarkably stable.
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