Make us your home page
Instagram

U.S. fuel boom likely to stabilize but not lower costs

The U.S. is awash in newfound petroleum and natural gas courtesy of oil field drilling technologies that promise to make the nation energy self-sufficient within the next few years.

Just don't expect cheaper gasoline, diesel fuel, natural gas, propane, heating oil or any other fossil fuel-based products as a result.

Even as the nation's access to fossil fuel resources grows, American consumers are competing with nearly everyone else on the planet for energy. That energy — even what is developed here at home — tends to go wherever in the world the money is.

"Price, in this free-market system, allocates supply. It goes to the highest bidder," said Jim Ritterbusch, president of Ritterbusch & Associates, an oil trading and advisory firm in Chicago. "Like everything in economics, it's a moving target."

About the only thing industry watchers agree on is that America's new petroleum supplies will likely bring about a period of stability in energy markets. "We're going to see much more stability than we have seen in the last 25 years," Ritterbusch said.

In a country where petroleum touches nearly everything, that stability is welcome.

"Unfortunately, this bigger-picture macroeconomic concept will be lost on fuel consumers, who only see what they pay at the pump," said Ethan Bellamy, a petroleum market analyst for Robert W. Baird & Co.

It might be lost, too, on people who had to buy propane this winter or who opened their heating bills and nearly fell over.

Shale gas is natural gas that is found within shale rock formations. Shale gas production in the United States has gone from virtually nothing in 2000 to more than 25.7 billion cubic feet per day in 2012, according to the U.S. Energy Information Administration.

"The price in Europe is still more than double what customers are paying here in the U.S.," said Gale Klappa, head of Wisconsin Energy Corp., Wisconsin's largest electric and gas utility.

Those prices will eventually catch up to each other, he said.

"Markets tend to be global these days, so when you see a price differential like that, eventually over time those price differentials will narrow," Klappa said.

Demand for natural gas also is expected to grow, whether from increased use for electricity generation or for truck fleets.

And, like just about every type of petroleum product in the United States, exports of natural gas also are expected to grow.

Analysts say the U.S. will export more natural gas than it consumes as soon as 2016 or 2017.

U.S. fuel boom likely to stabilize but not lower costs 02/14/14 [Last modified: Friday, February 14, 2014 7:40pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Tribune News Service.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Labor Department green-lights retirement savings rule

    Personal Finance

    WASHINGTON — A Labor Department rule that would set higher standards for the advice brokers give to retirement savers will go into effect June 9 without further delay, Labor Secretary Alexander Acosta said Monday.

  2. Report: CEOs got biggest raise since 2013 with Charter Communications CEO on top

    Corporate

    NEW YORK — The typical CEO at the biggest U.S. companies got an 8.5 percent raise last year, raking in $11.5 million in salary, stock and other compensation last year, according to a study by executive data firm Equilar for The Associated Press. That's the biggest raise in three years.

    Charter Communications CEO Thomas Rutledge -- whose company took over Bright House Networks last year -- was the highest paid CEO in 2016, according to a study carried out by executive compensation data firm Equilar and The Associated Press. 
[Associated Press file photo]
  3. For Gov. Rick Scott, 'fighting' could mean vetoing entire state budget

    State Roundup

    Every day, Gov. Rick Scott is getting a lot of advice.

    The last time a Florida governor vetoed the education portion of the state budget was in 1983. Gov. Bob Graham blasted fellow Democrats for their “willing acceptance of mediocrity.”
  4. Potential new laws further curb Floridians' right to government in the Sunshine

    State Roundup

    TALLAHASSEE — From temporarily shielding the identities of murder witnesses to permanently sealing millions of criminal and arrest records, state lawmakers did more this spring than they have in all but one of the past 22 years to chip away at Floridians' constitutional guarantees to access government records and …

    The Legislature passed 17 new exemptions to the Sunshine Law, according to a tally by the First Amendment Foundation.
  5. Data breach exposes 469 Social Security numbers, thousands of concealed weapons holders

    Corporate

    Social Security numbers for up to 469 people and information about thousands of concealed weapons holders were exposed in a data breach at Florida the Department of Agriculture and Consumer Services. The breach, which the agency believes happened about two weeks ago, occurred in an online payments system, spokesperson …

    Commissioner of Agriculture Adam Putnam on Monday that nearly 500 people may have had their Social Security numbers obtained in a data breach in his office.
[Times file photo]