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Tuesday, August 25, 2015

Price changes for August 27th, 2015

Hi to all,
 
Here's what I have for this week's price changes:
 
Heating and stove oils to drop by 3.7 cents.
Diesel to drop by 3.9 cents, and...
Gasoline to drop by six cents a litre.
 
In the markets...
 
China...It's all about China.
 
With the collapse of the price of oil, it's easy to point to China as an example of how dependent the world has become in using China as a "crutch" to support oil prices. We all know that as an emerging nation, China would have an effect on demand for world oil, but no one yet has considered what has been done by China to break it's initial dependence on oil. It is estimated by some that China is about three years away from putting domestic drilling regulations in place so it can try and develop its own reserves. Through the years, I've also run into small tidbits from China that others have ignored. Shell, for example, just a couple of years ago, signed a huge agreement with China to develop both natural gas and join with the state-owned oil company in developing other "sources" of oil resources. No doubt, if the "frack" goes ahead in China soon, it will have started to crack its dependence on OPEC oil and done massive damage to OPEC's chief customers. Where does oil go then?
 
OPEC countries worried
 
"Weaker" OPEC producers are beginning to worry over overall OPEC production and the Saudi drive to cut US domestic production. In what is beginning to look more like a suicidal motion towards trying to maintain market share, some of the smaller OPEC producers are beginning to question the moves by Saudi Arabia in over-producing to try to maintain market share and cut into US domestic costs to produce. It's costing smaller OPEC members to also absorb the hit to their own revenues, and has them calling for an emergency meeting to address the long-term goal of OPEC. Are we witnessing a crack in OPEC unity?
 
It's been a long drive back from the west coast, so, I'm going to leave it at that for now.
 
Regards,
 
George
Twitter @GeorgeMurphyMHA

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