Oil Slumps Below $28 To 2003 Low As Iran Sanctions Lifted

[Purveyor]

Source: Reuters

Oil prices slumped to a 2003 low below $28 per barrel on Monday as the market anticipated a rise in Iranian exports after the lifting of sanctions against Tehran over the weekend.

Responding to Tehran's compliance with a nuclear deal, the United States and major powers revoked international sanctions that had cut Iran's oil exports by about 2 million barrels per day (bpd) since their pre-sanctions 2011 peak to little more than 1 million bpd.

Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), issued an order on Monday to increase production by 500,000 bpd, the country's deputy oil minister said.

Worries about Iran's return to an already oversupplied oil market drove down Brent crude LCOc1 to $27.67 a barrel early on Monday, its lowest since 2003. The benchmark was down 29 cents at $28.64 by 1850 GMT (1350 ET).

Read more: http://www.reuters.com/article/us-global-oil-idUSKCN0UV14D

[craigmatic]

1. Just another way Obama is helping the economy.

[SoapBox]

2. And yet California/Los Angeles...$2.75-$3.00/gallon.

With all sorts of bullshit excuses.

[Drahthaardogs]

3. Why do you live there?

Unless you are in the movie industry, why subject yourself to those prices, that traffic, etc.

[jaysunb]

4. There's lot's more than the entertainment industry here.

Our largest industry is tourism.

[alfredo]

5. That's where the action is, and has been for a long time.

Liberalism has allowed for creativity across the board. The computer industry could not have been born in Mississippi, or South Carolina.

[Plucketeer]

15. Why live here?

It's a truly progressive state. That gas is higher here is partly because of the many and important taxes we have and also because of the spe4cial blends of gasoline that we switch between for the seasons. It's not easy to have clean air here because of the geography of this state. But it COULD look like those smog-bound cities in China if we did nothing to try and cut emissions.

Hell, the movie industry is almost non-existent here anymore. The studios still have a presence here, but even they have off-shored most of the real work that provides entertainment.

[GummyBearz]

18. No shit this is pissing me off

San Diego its $3.09. WTF

[CountAllVotes]

20. bullshit excuses.

well said !!

[hack89]

24. Not really

high taxes and gas that is only refined in California makes them a unique market.

[CountAllVotes]

25. No pure B.S. is what it is

They are saying the refineries in southern California are down right now which is fine I suppose if you live in southern Calif. However, the people living in the northern part of the state get their gasoline from Richmond, Calif. They are not "down" but their refineries are in a sad state of repair is the claim, hence the reason for the high prices.

If it weren't excuses such as these, they'd find other ones, believe it.

Noted gasoline to be at $2.49 at COSTCO yesterday, the lowest seen in several years but far from a gas war, that is for sure. I remember when it was 30+ cents a gallon. You could put $1.00 worth of gasoline in your car and drive around all night for that and there were no excuses then. I also remember the gas lines in the 70s and they had excuses then too.

Excuses excuses.

[hack89]

26. This is what the LA Times has to say about it

That's partly because California is considered an island in the industry, cut off from other oil-producing regions by its stringent environmental rules and a dearth of interstate pipelines. To improve air quality, the state limits the type of gasoline to a specially formulated blend commonly known as CARBOB. The blend, too expensive for most outside producers to make and deliver, is largely created within the state.

Before California adopted its special gasoline blend, refinery-level wholesale prices in the state averaged an inflation-adjusted 6 cents above the national average. From 1996 to 2014, they averaged 16 cents higher, according to Severin Borenstein, an economics professor specializing in energy markets and regulation at UC Berkeley's Haas School of Business.

Early each year, California refineries also transition from making winter blend gasoline to a cleaner-burning, pricier summer blend. The facilities also temporarily scale back production during planned maintenance.

Taxes, among the highest in the country, also lift the price of the fuel. As of Jan. 1, California retail gasoline taxes accounted for 63.8 cents per gallon, 15 cents higher than the nationwide average. Toward the end of last year, when a gallon of regular gasoline cost an average of $2.68, fees and taxes accounted for nearly a quarter of the cost, according to the California Energy Commission. Nearly half of the total cost was attributed to the cost of crude oil, 16.5% covered dealer and distributor costs, and 12% went to refiners.

http://www.latimes.com/business/la-fi-gas-prices-20150401-story.html

[hack89]

23. California has created a unique and isolated market for gas with their environmental laws

which leaves them dependent on a handful of refineries that blend California legal gas. Then on top of that you have the highest state and local taxes/fees and you end up with high prices.

That's partly because California is considered an island in the industry, cut off from other oil-producing regions by its stringent environmental rules and a dearth of interstate pipelines. To improve air quality, the state limits the type of gasoline to a specially formulated blend commonly known as CARBOB. The blend, too expensive for most outside producers to make and deliver, is largely created within the state.

Before California adopted its special gasoline blend, refinery-level wholesale prices in the state averaged an inflation-adjusted 6 cents above the national average. From 1996 to 2014, they averaged 16 cents higher, according to Severin Borenstein, an economics professor specializing in energy markets and regulation at UC Berkeley's Haas School of Business.

Early each year, California refineries also transition from making winter blend gasoline to a cleaner-burning, pricier summer blend. The facilities also temporarily scale back production during planned maintenance.

Taxes, among the highest in the country, also lift the price of the fuel. As of Jan. 1, California retail gasoline taxes accounted for 63.8 cents per gallon, 15 cents higher than the nationwide average. Toward the end of last year, when a gallon of regular gasoline cost an average of $2.68, fees and taxes accounted for nearly a quarter of the cost, according to the California Energy Commission. Nearly half of the total cost was attributed to the cost of crude oil, 16.5% covered dealer and distributor costs, and 12% went to refiners.

http://www.latimes.com/business/la-fi-gas-prices-20150401-story.html

[doc03]

6. I am really sad to see the oil companies go through such hardship.

[Odin2005]

7. That would be below $15 in 1990 dollars.

So basically oil is as cheap now as it was during the 80s glut.

The Peak Oil Doomers sure have egg on their faces.

[SoCalMusicLover]

8. Oil Futures?

How low can it go? Is now the time to speculate on oil?

It has to go back up eventually, right?

[Frank Cannon]

10. Once we get involved in three or four new wars next year, it will shoot back up.

We'll be looking at paying $4-$5 a gallon, and the good times will roll again.

[MosheFeingold]

11. Yes

And it will go up sharply, probably mid-year. It's below the cost of incremental production.

But I would expect it to stay around $50-60.

[rpannier]

9. That's because Pres Bush called up the Arabs and said, "Open those spigots."

At least that will be the spin at faux news

on edit:
either that or "Does the lower price in oil prove Obama hates Louisiana and Texas?"

[LastLiberal in PalmSprings]

12. The barrel costs more than the oil inside it

55 gallon empty steel oil barrel = $89



55 gallons of crude oil < $28

(Gas here in Southern California is still $2.68/gal.)

[Gregorian]

13. They own the barrel making factory. So it's pennies. But this is a perfect storm brewing.

I saw a negative price on oil the other day. First ever.

[Tab]

14. So, does that make fracking too expensive?

Because the original argument was that it couldn't sufficiently generate value until oil from traditional methods was over some point ($50/bbl?).

[Plucketeer]

16. Yes

And as a consequence, US fracking sites are shutting down like crazy. The unbelievable oil boom that was going on in the Dakotas is gonna crash like a wingless airplane. And of course, reverberate thru those state's economies!

[newblewtoo]

19. Deja vu all over again

How about a fable? Once a long time ago oil got very expensive and alternative sources of energy became popular. Heck, the president even put a solar collector on the White House. People drove less, car pooled, and, reduced speed limits. Then one day people became accustomed to higher prices and interest in solar and wind waned. Solar companies went out of business and wind projects were shelved. The SUV ruled the land. Speed limits went back up.

We are about to relive those years. If you think the only thing to fail will be fracking you might want to think again. Solar and wind will be next to fall as cheap oil flows once again. Yup, party like it is 1984. Cheap oil will kill wind and solar. Bank on it as they say, bank on it.

[Sunlei]

21. 30k + cars & cheap interest rates on 8 year car loans will be the next crash we can 'bank on'

on the positive side repo corps/banks will be flooded with good used cars.

IMO, the next stage of crude oil will be "in si·tu" refining to gasoline to meet more local demand.

[bluestateguy]

22. but I'm enjoying the cheap gas

It has freed up a lot of extra money for me for other things.

[jamzrockz]

27. I am really enjoying thisa low gas price

Last night I prepaid for $20 worth of gas and my gas was filled at about $18. Normally, I would go back in to collect the $1 and change left but this time I did not and it had nothing to do with the blistering cold, I just felt like they needed a break.

Anyway, I just don't want to enjoy the cheap gas price, I would like to know if there is a way to make money off it. Maybe something to do with oil futures and buy a lot now and selling when prices eventually rise. Anyway, have information on how one can go about doing this?