The Struggle Continues in the Oil Industry

Friday, August 21, 2015

There’s more bad news for the struggling oil industry, but good news for drivers and consumer confidence. Oil this week was down 4% putting crude at 6 ½ year low. Traders are calling for October futures of $41.27 per barrel with inventory reports of a sky-high to 2.6 million barrels, a number which will continue to grow.

And as the winter months approach, the price of gas is only projected to plummet even further. And this is for a combination of reasons. First, there’s the end to the infamous summer travel season, which means demand for gas plummets. Americans inherently hibernate in the winter months, grinding all road travel to a halt.

Cheaper winter gasoline blends are another contributing factor to the looming price drop. Around mid-September every year, retailers being supplying the more affordable option, which brings prices down a nationwide average of 20 cents. The winter blend is more affordable because it is blended with increased levels of butane. But it’s also worse for the environment and is not as pure.

There is a glimmer of hope for the oil industry. Potentially driving up gas prices in the coming weeks is the weaker dollar, which could float crude prices on the global market. Another grasp at straws is the ensuing Tropical storm Danny, which could shut down Gulf oil rigs. But there are very marginalized potential contributing factors to any surge in prices. It’s a rough time for drillers worldwide.