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How Much Will Low Oil Prices Stimulate Demand?

Since weak oil demand growth is a major ingredient in the current oil price crash, higher demand stimulated by low prices could be a moderating factor. While US demand has risen since prices fell, there are several reasons why the global response may be slower to appear and less dramatic. One of the main factors that will determine the depth and duration of the current slump in oil prices is the extent and timing of a resulting rebound in demand. It is likely to occur first in countries like the US, where fuel taxes are low and consumers see the results of lower oil prices at the gas pump relatively quickly--a $1.65 per gallon drop already, since June. However, other factors besides taxes could impede faster demand growth elsewhere. From 2007 to 2009 the combination of high oil prices and a weak economy reduced US petroleum demand by almost 2 million barrels (bbl) per day , compared to its 2006 peak. The first volumes backed out of the market were imported refined products, which

Could Diesel Fuel Made from US Natural Gas Compete with CNG and LNG?

The announcement last month of a $21 billion project to capitalize on abundant, low-cost US natural gas should have caught the attention of everyone interested in this resource. As reported in the New York Times , Sasol, a South African energy company, intends to build a 96,000 barrel-per-day gas-to-liquids (GTL) plant in southwestern Louisiana, in conjunction with a new gas processing plant and ethylene cracker. The synthetic diesel fuel produced by this facility would provide a different pathway for shale gas to displace imported crude oil in the US transportation sector, in competition with compressed or liquefied natural gas (CNG or LNG.) GTL involves a two-step conversion of the methane that makes up the bulk of natural gas into synthesis gas and hydrogen, which are recombined into liquid hydrocarbons by means of the decades-old Fischer-Tropsch (FT) process. GTL is also energy-intensive, with an overall efficiency around 60% . South African companies have vast experienc

The Impact of the Global "Sweet" Crude Bulge

The recent slide in global oil prices has been compounded by the pressure that rising US shale oil production is putting on the price of sweet crude benchmarks like Brent. OPEC's producers may suffer as much as those in the US, while consumers benefit from significantly lower fuel prices than last year. When the US went to war in Iraq in 2003, the price of oil embarked on a trend that took it from around $30 per barrel to nearly $150 before collapsing in the recession in 2008. This time, as a new US-led coalition takes on ISIS with a bombing campaign in Iraq and Syria, the price of oil is falling, down 20% in the last two months. It's not just that global economic growth has weakened recently, or that soaring shale oil output in the US has averted another oil crisis . Oil's current downturn also reflects the fact that new production from the Bakken, Eagle Ford and other shale deposits is particularly well-suited to undermine oil's global benchmark prices, for Brent

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