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Cheap gas may affect economy, energy policy
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By T.L. Hamilton
Economists have forecasted economic doom for the Houston area if oil prices remain low, which also could come into play for Montgomery County’s economic health.
But the rock-bottom prices may encourage drivers to go back to their gas-guzzling ways, said Ron Welch, economist at the Institute for Regional Forecasting for the University of Houston.
“If it stays below two dollars (per gallon) through 2009 they probably will,” Welch said.
Oil prices ended flat Friday with OPEC officials sending mixed messages about a production cut before a regularly scheduled meeting in December.
Meanwhile, gasoline prices continued their freefall and are now at levels not seen since Jan. 21, 2005.
The average price of regular unleaded gasoline fell 12 cents statewide compared to last week, from $1.882 to $1.755 a gallon, according to AAA Texas.
Houston, at $1.699, fell by more than 11 cents since last week, while the national average price fell by 15 cents from $2.020 to $1.868.
Crude was up about 9 percent for the week from the settlement price Nov. 21.
“We were a little overcooked earlier this week, so it looks like we're going to give some of it back today,” Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said Friday.
Oil prices fluctuated between $50 and $55 last week, pausing after a fall of more than 60 percent since reaching a record $147.27 in mid-July.
“With prices now more than a dollar lower than they were at this time last year, more Texans may decide at the last minute to travel to visit family for the holiday,” AAA Texas spokeswoman Sarah Schimmer said.
However, Welch said that since many Montgomery County motorists are daily commuters, high gas prices earlier this year might have encouraged them to seek vehicles with better gas mileage.
“I didn’t pay much attention to gas prices until it got to $4 per gallon,” he said. “But Montgomery County commuters have probably learned their lesson by now and they’re looking for a car that gets 25 to 30 miles per gallon.”
But Barton Smith, the institute’s director, said he’s heard rumors that Ford and GM are starting to sell their pickups again.
“That’s just what we need to get gas prices up a little and keep the local economy from a downturn,” he said.
Smith said the sad part of persistently low gas prices is that the public clamoring for more offshore drilling and research on alternative forms of energy will all disappear.
Smith said it’s likely The low gas prices have already put a hole in T. Boone Pickens’ wind energy ventures, which aren’t economically viable with oil at less than $80 per barrel.
“When energy’s cheap, the American public takes the pressure off politicians to solve energy problems,” he said. “At $150 per barrel they’d definitely focus on both offshore exploration and developing alternatives to oil.”
As oil and natural gas prices rose to record levels earlier this year, interest increased in wind energy, Pickens said Friday, but the current lower prices for fossil fuels has — in some quarters — reduced the eagerness to pursue alternative energy sources.
That's a mistake, he said.
“We just need to get a plan and stick with it and not be so quick to change when the (gas) price goes down,” Pickens said. “That's been the yo-yo we've had since the '70s ... in the '70s, '80s, '90s and now you're in 2008 and you're hearing it again.”
With Houston’s economy dependent on its oil industry and still buoyant from higher prices earlier this year, the city might start suffering the same downturn the rest of the nation is experiencing if those prices remain low.
Congressman Kevin Brady, R-The Woodlands, said President-elect Barack Obama’s plans for energy will be all-important to the Houston-area’s economy.
If Obama moves to reinstate the moratorium on deep ocean exploration, eliminates incentives for new refinery capacity or increases taxes on traditional energy companies that invest in America, then the Houston-area economy and the rest of the nation will suffer, he said.
“On the other hand, if he pursues a truly balanced strategy of additional traditional energy and more renewable energy, then the Texas economy will grow.” he said. “And so will the country.”
Brady said he doesn’t think low gas prices will stop exploration or research on alternative energy sources, saying that most see this as only a temporary reprieve until the world economy gets back on its feet.
“The International Energy Agency recently predicted that nations will need to invest more than $26 trillion in new energy supply over the next twenty years to meet world demand, and that's including advances in renewable energy,” he said. “Most companies didn't build $140 a barrel oil into their business model for either traditional or renewable energy. I'll work along side the new President to encourage that new research.”
But the rock-bottom prices may encourage drivers to go back to their gas-guzzling ways, said Ron Welch, economist at the Institute for Regional Forecasting for the University of Houston.
“If it stays below two dollars (per gallon) through 2009 they probably will,” Welch said.
Oil prices ended flat Friday with OPEC officials sending mixed messages about a production cut before a regularly scheduled meeting in December.
Meanwhile, gasoline prices continued their freefall and are now at levels not seen since Jan. 21, 2005.
The average price of regular unleaded gasoline fell 12 cents statewide compared to last week, from $1.882 to $1.755 a gallon, according to AAA Texas.
Houston, at $1.699, fell by more than 11 cents since last week, while the national average price fell by 15 cents from $2.020 to $1.868.
Crude was up about 9 percent for the week from the settlement price Nov. 21.
“We were a little overcooked earlier this week, so it looks like we're going to give some of it back today,” Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates, said Friday.
Oil prices fluctuated between $50 and $55 last week, pausing after a fall of more than 60 percent since reaching a record $147.27 in mid-July.
“With prices now more than a dollar lower than they were at this time last year, more Texans may decide at the last minute to travel to visit family for the holiday,” AAA Texas spokeswoman Sarah Schimmer said.
However, Welch said that since many Montgomery County motorists are daily commuters, high gas prices earlier this year might have encouraged them to seek vehicles with better gas mileage.
“I didn’t pay much attention to gas prices until it got to $4 per gallon,” he said. “But Montgomery County commuters have probably learned their lesson by now and they’re looking for a car that gets 25 to 30 miles per gallon.”
But Barton Smith, the institute’s director, said he’s heard rumors that Ford and GM are starting to sell their pickups again.
“That’s just what we need to get gas prices up a little and keep the local economy from a downturn,” he said.
Smith said the sad part of persistently low gas prices is that the public clamoring for more offshore drilling and research on alternative forms of energy will all disappear.
Smith said it’s likely The low gas prices have already put a hole in T. Boone Pickens’ wind energy ventures, which aren’t economically viable with oil at less than $80 per barrel.
“When energy’s cheap, the American public takes the pressure off politicians to solve energy problems,” he said. “At $150 per barrel they’d definitely focus on both offshore exploration and developing alternatives to oil.”
As oil and natural gas prices rose to record levels earlier this year, interest increased in wind energy, Pickens said Friday, but the current lower prices for fossil fuels has — in some quarters — reduced the eagerness to pursue alternative energy sources.
That's a mistake, he said.
“We just need to get a plan and stick with it and not be so quick to change when the (gas) price goes down,” Pickens said. “That's been the yo-yo we've had since the '70s ... in the '70s, '80s, '90s and now you're in 2008 and you're hearing it again.”
With Houston’s economy dependent on its oil industry and still buoyant from higher prices earlier this year, the city might start suffering the same downturn the rest of the nation is experiencing if those prices remain low.
Congressman Kevin Brady, R-The Woodlands, said President-elect Barack Obama’s plans for energy will be all-important to the Houston-area’s economy.
If Obama moves to reinstate the moratorium on deep ocean exploration, eliminates incentives for new refinery capacity or increases taxes on traditional energy companies that invest in America, then the Houston-area economy and the rest of the nation will suffer, he said.
“On the other hand, if he pursues a truly balanced strategy of additional traditional energy and more renewable energy, then the Texas economy will grow.” he said. “And so will the country.”
Brady said he doesn’t think low gas prices will stop exploration or research on alternative energy sources, saying that most see this as only a temporary reprieve until the world economy gets back on its feet.
“The International Energy Agency recently predicted that nations will need to invest more than $26 trillion in new energy supply over the next twenty years to meet world demand, and that's including advances in renewable energy,” he said. “Most companies didn't build $140 a barrel oil into their business model for either traditional or renewable energy. I'll work along side the new President to encourage that new research.”
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Reader Comments
kyhooya wrote on Dec 1, 2008 8:10 AM:
" I'm good with fuel prices being at $2 per gallon. Keeps a level playing field. I put over 34000 miles a year on my car so I budget for it. Most other states do pay more for fuel. I do think that states like Florida and California should pay more. Don't let us drill.....pay more for fuel.
Remember it is all a game that changes rules constantly. "
Remember it is all a game that changes rules constantly. "
BigTexN wrote on Dec 1, 2008 9:31 AM:
" Lower gas prices are definitely affecting my economy!
WOOHOO!! YEAH BABY!!
No one in my household works in the oil industry so higher gas prices did not benefit us at all. Not to mention, no oil companies were hiring over the past year either.
As far as personal net worths are concerned, anyone who had their portfolio all in energy and are feeling the affects now are no different than the tech bubble losers or the idiot employees of Enron who had all their net worths all in company stock.
Greed will kill ya!
Mark my words, on this page here and now...whenever a bubble pops, the selling exaggerates itself on the downside. I put the price of oil just below $30 a barrel for a bottom...that would put gasoline below $1 a gallon.
Target date...February 1, 2009.
Remember, you heard it here first! "
WOOHOO!! YEAH BABY!!
No one in my household works in the oil industry so higher gas prices did not benefit us at all. Not to mention, no oil companies were hiring over the past year either.
As far as personal net worths are concerned, anyone who had their portfolio all in energy and are feeling the affects now are no different than the tech bubble losers or the idiot employees of Enron who had all their net worths all in company stock.
Greed will kill ya!
Mark my words, on this page here and now...whenever a bubble pops, the selling exaggerates itself on the downside. I put the price of oil just below $30 a barrel for a bottom...that would put gasoline below $1 a gallon.
Target date...February 1, 2009.
Remember, you heard it here first! "
pprwrtr wrote on Dec 1, 2008 10:56 AM:
" Just like the illegal immigrant problem that the government has ignored for decades, it have ignored the oil dependency problem for decades. We desperately need new sources of energy. Anyone who is in oil business or has a lot of oil stock will be loudly against this because this has made them rich. Common sense tells me that we need to not be dependent on other countries for our energy sources. People have been asleep at the wheel in the federal government for years and years (both parties). Now we are running out of time. I don't like to live on fear, but this is horrifying. The local economy may suffer, but other energy sources soon are our only hope for this country. We are like children--dependent on other countries for oil and money (TRILLION dollar debt)! "
npdandk wrote on Dec 1, 2008 11:07 AM:
" Well with the lower gas prices in effect the economy at my house is looking pretty good so I say keep dropping baby!!!!!!!!!!!!1 "
Hennessy62082 wrote on Dec 1, 2008 1:10 PM:
" I work in the oil industry and they laid 75 rigs down last week (11-24 - 11-28)...its hurting us who work in it. "
npdandk wrote on Dec 1, 2008 1:40 PM:
" Well I hate to hear of anyone losing theyre job but since I was forced to pay almost $5.00 a gal. gas back in July I cant feel sorry for these oil companys,truth be known they are the ones cutting jobs and closing rigs down to supplement theyre profits and billion dollar lifestyle.... "
Hennessy62082 wrote on Dec 1, 2008 2:01 PM:
" I dont work on a rig...our company here in Houston manufactures parts for the rigs. But if rigs are down...we arent selling "
BigTexN wrote on Dec 1, 2008 2:39 PM:
" To all the oil guys feeling the pinch, I say WELCOME TO THE PARTY!!!
Ask the poor saps at your local car dealership how they've been doing.
Ask your local banker how they've been doing.
Ask your local real estate agent how they've been doing.
Ask you local mortgage broker how they've been doing.
Ask your local investment advisor how they've been doing.
Ask anyone who relies on gas to fuel their work vehicles (contractors, yardmen, etc) how they've been doing.
You oil guys are just late to the party.
FYI for you oil guys, you can join our group therapy for depression which is held at the community center from 7-8 Monday- Friday. "
Ask the poor saps at your local car dealership how they've been doing.
Ask your local banker how they've been doing.
Ask your local real estate agent how they've been doing.
Ask you local mortgage broker how they've been doing.
Ask your local investment advisor how they've been doing.
Ask anyone who relies on gas to fuel their work vehicles (contractors, yardmen, etc) how they've been doing.
You oil guys are just late to the party.
FYI for you oil guys, you can join our group therapy for depression which is held at the community center from 7-8 Monday- Friday. "
Whiskyecho wrote on Dec 1, 2008 5:13 PM:
" Exxon shatters profit records
Oil giant makes corporate history by booking $11.7 billion in quarterly profit; earns $1,300 a second in 2007.
Exxon Mobil booked the biggest quarterly and annual profits in U.S. corporate history Friday, helped by higher oil prices"
_____________________________________________________________________________________
Biggest profits in the history of the world.....
tough to feel sorry for anyone related to the oil industry or believe that "cheap gas may affect economy" (any more than "expensive gas" has already affected our economy) with those kinds of headlines "
Oil giant makes corporate history by booking $11.7 billion in quarterly profit; earns $1,300 a second in 2007.
Exxon Mobil booked the biggest quarterly and annual profits in U.S. corporate history Friday, helped by higher oil prices"
_____________________________________________________________________________________
Biggest profits in the history of the world.....
tough to feel sorry for anyone related to the oil industry or believe that "cheap gas may affect economy" (any more than "expensive gas" has already affected our economy) with those kinds of headlines "
drivermom wrote on Dec 1, 2008 8:42 PM:
" Gas price have not been this low in over 4 years. The economy was just fine then. It is nice to fill up my 11 gallon vehicle and not have to break the bank.
At the corner of Sawdust/Rayford at I-45 at the three Shell stations the price for regular gas is $1.59. That is a good price! I figure it should cost around $18 buck for a fill up! Nice for a change for a lot of people. "
At the corner of Sawdust/Rayford at I-45 at the three Shell stations the price for regular gas is $1.59. That is a good price! I figure it should cost around $18 buck for a fill up! Nice for a change for a lot of people. "
tired of rino's like sadler wrote on Dec 1, 2008 10:29 PM:
" Question!!!! When gas prices were soaring the Courier reported that Yukon Sadler and the school districts were going bankrupt! Now with the record low prices is Yukon and the school districts talking about dropping our tax rate to make us whole?
NEVER Yukon Sadler is addicted to your money and spending it! "
NEVER Yukon Sadler is addicted to your money and spending it! "
BigTexN wrote on Dec 2, 2008 8:30 AM:
" Tired of Rinos, do you know what happens to your message when people classify you as a blowhard?
They tune you and your one trick pony message out...making it complete ineffective.
Your odd, twisted obsession with Sadler should get you a restaining order. "
They tune you and your one trick pony message out...making it complete ineffective.
Your odd, twisted obsession with Sadler should get you a restaining order. "
tired of rino's like sadler wrote on Dec 2, 2008 9:02 AM:
" BIg Fat N
If I cared what you think it would matter.
Your blogs are so childish I ignore, as I am sure the rest of the folks, 90% of them.
On top of that you think you are funny and your comments are entertaining . . .if one is 5 years old that would be correct Sadler lover. "
If I cared what you think it would matter.
Your blogs are so childish I ignore, as I am sure the rest of the folks, 90% of them.
On top of that you think you are funny and your comments are entertaining . . .if one is 5 years old that would be correct Sadler lover. "
BigTexN wrote on Dec 2, 2008 9:26 AM:
" OWW! OH MY FEELINGS! OWW! OH THEY'RE HURT!
BOOHOO! OUCH!
You're such big meanie!!
I'm rubber, you're glue! What you say bounces off me and sticks on you!
NYAH!!
:P
How's that for childish? And funny! "
BOOHOO! OUCH!
You're such big meanie!!
I'm rubber, you're glue! What you say bounces off me and sticks on you!
NYAH!!
:P
How's that for childish? And funny! "
BigTexN wrote on Dec 2, 2008 1:24 PM:
" ...but, on a serious note, the anti-Sadler soapbox is a bit overdone and a little on the stalker/creepy side.
Not EVERYTHING is a Sadler issue....believe it or not.
Sadler didn't make hurricane Ike hit Texas.
Sadler doesn't talk to UFOs or nefarious black ops agents.
Sadler isn't having you followed by silent helicopters.
Sadler isn't bugging your phones.
Sadler isn't having you followed by the sheriff's office...although...he probably should. "
Not EVERYTHING is a Sadler issue....believe it or not.
Sadler didn't make hurricane Ike hit Texas.
Sadler doesn't talk to UFOs or nefarious black ops agents.
Sadler isn't having you followed by silent helicopters.
Sadler isn't bugging your phones.
Sadler isn't having you followed by the sheriff's office...although...he probably should. "
tired of rino's like sadler wrote on Dec 2, 2008 6:50 PM:
" Big Fat N
First of all who made you god and judge of what is posted on this blog?
Secondly PLEASE quick with your lame, lack of creativity and inept attempts to entertain . . . it does entertain anyone but you I am sure. You are basically yourself as no one else will.
Lastly friends and family members have lost their homes or had to sell them because of Sadler's tax and spend leadership and that my inept friend is enough for we to "rail" him with facts until voters throw him out on his rear!
Now go pleasure yourself inept one. "
First of all who made you god and judge of what is posted on this blog?
Secondly PLEASE quick with your lame, lack of creativity and inept attempts to entertain . . . it does entertain anyone but you I am sure. You are basically yourself as no one else will.
Lastly friends and family members have lost their homes or had to sell them because of Sadler's tax and spend leadership and that my inept friend is enough for we to "rail" him with facts until voters throw him out on his rear!
Now go pleasure yourself inept one. "
Whiskyecho wrote on Dec 1, 2008 7:32 AM:
uh, the "local economy" was doing just fine BEFORE everything else turned to junk and, guess what, gasoline prices were somewhat reasonable at that time "