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Fuel Oil News
PO Box 2123, Skokie, IL 60076-7823
G
oldman Sachs just came out with an announcement that oil might bounce
down to $20 per barrel at some point. This brought to mind this announce-
ment from March 7, 2008, from Goldman Sachs: "As the lack of supply growth
and price-insulated non-OECD demand suggest a future rebound in U.S.
gross domestic product growth or a major oil supply disruption could lead to $150-$200
a barrel oil prices."
I was pleased with myself for making such a clever observation. But, while searching
the web for the quote from 2008 I noticed that others were also commenting on this
ironic twist. Actually the observation was pretty obvious. Goldman was pumping out
Armageddon press releases almost weekly and the media—business and mainstream—
hyped them. I'm pleased to say that the late Peter Beutel was a voice of reason I used
regularly when needing voices of reason when analyzing fuel prices, and we did not
jump on that Goldman Sachs bandwagon at FON or our former sister publication NPN.
I still give the financial reforms our industry help push through under Dodd-Frank a
tremendous amount of credit, at least in part, for today's low prices and for some degree
of the reduction in volatility we've seen. But the miracle, or more precisely the ingenuity,
of the fracking oil boom is drowning most other factors in a sea of black gold. In our oil
prices article on page 16, our experts get into the impact this is having on today's prices
and what this means more broadly. While nothing is certain and much of this is brand-
new territory, you get the very strong vibe that the world has actually changed. Berlin
Wall coming down type change. America is now a new Saudi Arabia and one can only
expect there to be more new Saudi Arabia's cropping up throughout the world.
For heating oil dealers it doesn't mean that natural gas prices are going to drop, but it
does mean that oil prices are likely going to remain competitive. The same holds true for
propane. For America, it means not having to dance to the tune played by the OPEC set,
who curse us while they hold out their hands for the next petrodollar.
The only thing that can hold us back now, literally, is ourselves. At a time when gaso-
line prices are under $3 per gallon throughout most of the United States, gasoline is still
over $4 per gallon in parts of California. While there has been grumblings from state
politicians for investigation into the oil industry over such prices, the reality is California
has created the energy market it apparently desires though the power of dreams
enforced by bureaucratic regulation. And, unfortunately, the dreams aren't free.
Much of the same thing seems to be happening at the federal level from an admin-
istration that doesn't seem to be too keen on having cheap energy. Let's hope the worst
of what's being proposed with the administration's new ozone regulations and power
plant regulations is curtailed at the court level or by a future administration. That is par-
ticularly the case since while natural gas at least gets tolerated (and that's an important
distinction), the same cannot be claimed for oil.
l F O N
Keith Reid
8 OCTOBER 2015 | FUEL OIL NEWS | www.fueloilnews.com
America's Energy Future
