By on August 23, 2015

Entrance_OPEC_Headquarter_Vienna

Iran’s oil minister has said that an emergency OPEC meeting may be necessary to stem the tide of slumping worldwide oil prices, Reuters is reporting. Algeria has also called for an emergency meeting.

A barrel of crude oil slid to its lowest price last week of around $40, the lowest in more than six years. Record low gas prices could closely follow, which would help American drivers and car buyers, however the broader economic impact may be tougher to discern. Worldwide markets sank on Friday, largely on fears that China would slow its economic growth and instability in Greece could hamper European economies.

Iran said an emergency meeting would be “effective” in slowing the oil slump. OPEC isn’t scheduled to meet until Dec. 4.

According to the Reuters report, an emergency meeting wouldn’t likely happen without Saudi Arabia, the largest member of OPEC. Saudi Arabia has indicated it could withstand lower oil prices, and analysts say the country isn’t likely to reverse its course anytime soon.

Americans have driven more in the first six months of 2015 than they ever have, according to the Federal Highway Administration. Many people say cheap gas and good economic conditions have led to more vehicle miles traveled.

Get the latest TTAC e-Newsletter!

Recommended

59 Comments on “Iran Calls for Emergency OPEC Meeting Amid Oil Slide...”


  • avatar
    JimC2

    “… barrel of crude … lowest in more than six years. Record low gas prices could closely follow.”

    Next up, who’s going to go on a fuel hedging binge? (Southwest Airlines is famous for this.)

  • avatar
    50merc

    Jim, the “oil glut” is just a fantasy. The experts said Peak Oil would leave us desperate for energy by now.

    Oh, you say there’s more oil supply than ever? As the Green Fanatics might say, “Curses, foiled again!” Next step: dismantling negative-return-on-investment wind turbines.

    • 0 avatar
      JimC2

      @50merc, I guess the biggest question is whether the future will be “Mad Max” or “Waterworld.” Wheels or boats? Better to join an oil gang early on, get in on the ground floor and build seniority before the oil apocalypse. Wait too long and the Nightrider gang (or the Smokers) will pick you off.

      :)

    • 0 avatar
      nickoo

      That sort of thinking about wind turbines is 40 years out of date. They didnt pop up all over the country because they,re a negative roi. Solar farms are already making electricity for 4 cents pet kwh and ate projected to hit 3 by the end if the decade. Green energy is here and its a good thing. Besides oil isnt burned cor electricity. Its put into gas tanks.

      • 0 avatar
        dolorean

        @nickoo “That sort of thinking about wind turbines is 40 years out of date. They didnt pop up all over the country because they,re a negative roi”

        You obviously haven’t driven I70 from Kansas City to Denver recently. Until you do, I’d rethink what you wrote.

      • 0 avatar
        JD23

        “They didnt pop up all over the country because they,re a negative roi.”

        Do your detailed ROI calculations include subsidies?

        • 0 avatar
          nickoo

          Ill include subsidies in my roi if you include subsidies in the fossil fuel industry including all externalities such as multitrillion dollar wars, regional instabilities, loss of life and displacement costs, costs to our reputation, direct breaks and subsidies, as well as current and future environmental impacts.

    • 0 avatar
      Brett Woods

      Good reading if you are interested in that sort of stuff:
      http://peakoilbarrel.com/world-energy-2014-2050-part-1-2/

  • avatar

    So when exactly do I see these apocalyptic gas prices at the pump???

    I’m still spending $3.15 a gallon Super Premium Unleaded 93.

    I hear talk, but I don’t see a damn thing.

    • 0 avatar
      kmoney

      For real. Gas was 99 cents/litre here about 6 months ago when oil was in the $60s; now it’s $1.30. I know gas prices are more than simply a base+ of oil prices, but come on….

    • 0 avatar
      seth1065

      Big Truck,
      Not sure where your getting gas in the garden state paid $2.46 for premium today in central NJ, and it is cheaper down Edision way, and RUG was $2.09 as was the price of diesel which makes me one happy camper, lowest I saw last time gas tanked about a year ago was $1.62 RUG in NJ.

    • 0 avatar
      nickoo

      Thanks to bush and his crooks pushing through the commodities futures modernization act, the price of gasoline is determined by goldman sachs and other hedge funds skimming futures rather than supply and demand market forces.

      http://mobile.nytimes.com/2012/04/11/opinion/ban-pure-speculators-of-oil-futures.html?referrer=&_r=0

      • 0 avatar
        kosmo

        Thanks to Barney Frank and his crooks pushing through a bunch of pretty much ineffective financial regulations, we’re likely heading for another real estate bubble again………..

        No shortage of political nonsense to go around from all sides of the table.

        • 0 avatar
          nickoo

          No. You have no idea what caused this real estate bubble. Its starts with the international banking cartel keeping interest rates artificially low leading to misallocation of capital. I find it funny youd blame barney frank in a total non sequitor to goldman sachs skimming oil futures. Wingnut much?

          • 0 avatar
            hreardon

            Plenty of blame on both sides of the aisle: the financial services industry breeds sociopaths who will hunt and consume as much as they are allowed to get away with; Consumers are, by and large, the same. If rules allow mortgage brokers to sell $450,000 mortgages to someone with $42k/year in income and no other assets, shame on the regulatory body for not recognizing the danger. Likewise, suggesting that “everyone deserves to own a home” sets the stage for massive mal-investment (cue student loan bubble), and a large number of consumers are just not bright enough to understand basic finance.

  • avatar
    Big Al from Oz

    Well, Iran welcome to free markets and capitalism. OPEC is toothless, like the UN or even the EU to a degree.

    The Iranian’s need to improve it’s aging oil infrastructure to become competitive. Money is required.

    Will Iran make money out of oil at the current pricing levels? I don’t think so.

    This is a problem the Iranian’s must resolve, rigging markets to sell at a price so you can compete in the end only creates inefficiencies and the true value of a product/commodity is never recognised.

    It’s called protectionism, similar to how countries bow down to farmers, unions, industry, etc.

    If you can’t compete don’t produce, until it is viable.

    • 0 avatar
      Lorenzo

      For Iran, it’s not that simple. many of their wells are something like 90 years old, originally drilled by the British. Their oil is also heavy and sour (thick as molasses and full of sulfur), and they have to pump continuously to get the last of the oil out of those wells. Once they stop pumping, they may not be able to get the rest out later.

      Their problem is those wells are the bulk of their production – they haven’t been drilling new wells or upgrading infrastructure since the 1979 revolution, and they need the revenue to pay for the new wells and infrastructure. They did the same thing Saddam did in Iraq, let a modern up to date oil industry get old and decrepit by diverting revenue, and now they’re paying for it.

      Now that they see the end of sanctions, they’re in even worse shape, since the $40/bbl price is for the highest grade of oil, and they’ll get less than half that for the low grade oil they’re pumping. Saudi Arabia, with 1/3 OPEC’s production won’t help, they’re trying to kill off American shale before it’s too late (and it’s already too late, they just don’t realize it yet).

      • 0 avatar
        JimC2

        “they’re trying to kill off American shale before it’s too late (and it’s already too late, they just don’t realize it yet).”

        Yyyyup. Shale oil (and tar sands, etc.) is a question of when it is profitable to produce or when it is better to wait for the price of oil to come up again. The break-even figure varies from $100/barrel for the most difficult deposits to quite a bit less than that for others. The Saudi oilmen, having underestimated this particular competition many years ago notwithstanding, are nonetheless astute and aggressive businessmen.

        Excellent reminder about the prices of sweet and sour crude.

        • 0 avatar
          hreardon

          JimC2-

          According to one of my clients who is in the industry, a lot of the newer shale projects are profitable at around $65 bbl; Older ones are indeed pushing $100.

  • avatar
    SC5door

    I see these comments about “falling” fuel prices, yet BP’s Whiting refinery went down and sent prices skyrocketing within 30 minutes of the news—stretching all the way into middle Michigan. My local station jumped $.60/gallon the first day and another $.10 the next day.

    So will BP and the other refineries have more “unintended” shutdowns to keep gas prices into the $3.00 range still?

    Also, I’d expect China to slow down at some point, have they found the cause of the huge explosion yet?

    • 0 avatar
      Big Al from Oz

      SC5door,
      Yes, supply and demand……at a very local level.

      How much would it of cost to transport fuel from another refinery? How much lead in time is required?

      If the problem where you live continued another refinery would of supplied and prices would of dropped.

      What you encountered is not due to anything other than localised issues.

      The oil glut still remained and the refinery that went down did not impact the price of WTI.

      • 0 avatar
        SC5door

        I’m well aware of supply and demand.

        Supply and demand should not be raising prices at local stations within 30 minutes of the refinery announcing they’ve had a problem.

        • 0 avatar
          JimC2

          “Supply and demand should not be raising prices at local stations within 30 minutes of the refinery announcing they’ve had a problem.”

          On the contrary, it makes a lot of sense for them to do that. If the gas stations almost-but-not-quite run out right before the next fuel truck arrives that means they were selling at exactly the right price. And if they are suddenly anticipating delays and problems with their supply then they ought to suddenly raise their prices.

        • 0 avatar
          jrhmobile

          Actually, for independent mom-and-pop stations, Prices should rise within 30 minutes of the refinery announcing problems.

          The price you pay for gas doesn’t cover the last shipment of gas from the terminal to the station; it’s priced to pay for the next one. Many small stations pay for gas shipments on the spot. Most all the rest either have automated account withdrawals or 7 days net billing.

          If gas prices rise 10 cents per gallon in a week, that twice-a-week 5-8,000 gallon (or more) delivery has to be paid for pronto. An extra $1500-$2000 a week to pay for a product that may sell for a 5 cent markup takes a lot of extra sales to make up for pricing shortfalls.

          This is why gas prices rise quickly, but take a while to settle back down. In a high-volume, low-margin market like gas sales, you’re always covering the cost of the next wholesale purchase. Not the last one.

    • 0 avatar

      At least half of that 60 to 70 cent spike has retreated by now. I’ve found that buying gas in the city usually saves about 10 cents a gallon and the last time I was on Seven Mile Rd, prices were back down to about $2.70. The lowest I’d seen it recently before that refinery went down was $2.47.

      FWIW, when I graduated from high school in 1972, gasoline was about 33 cents a gallon. With inflation that’s worth $1.88 in today’s dollars. The first time I paid $1.00/gal was in 1979 or 1980 (thanks Iran!), which works about to $3.25 today.

      • 0 avatar
        Big Al from Oz

        Ronnie,
        What you must take into consideration is the cost of fuel in operating a vehicle per capita as a percentage average income.

        I do think it is far cheaper this day and age to operate and own a vehicle than in 72.

        I do know Bloomberg did have an interactive map showing nations across the globe and what percentage of money is spent on a gallon of gas as a percentage of average income. This article didn’t take into account the makeup of vehicles in each individual market (country).

        Even though fuel did look expensive in Australia in comparison to the US we actually were paying 2.8% of our average daily income compared to the US’s 2.6%.

        This area of ecomomics is interesting, when technology, income have a perverse affect on making historical comparisons. The information and data might not give a true representation of reality.

        Even though incomes have dropped in the US since the early 90s, what can you buy now with the money compared to back in 92? More?

        We can now buy “stuff” that was science fiction back then or massively expensive, which now can be bought cheaply. Look at the cost of getting into a basic car with the technology and quality they have now. What vehicle offered those features and the quality in 92. Even TVs?

        So, are you worse or better off?

        Technology is what will save us from ourselves.

      • 0 avatar
        SC5door

        In the Chicago area it’s finally down to the $3.00 level—which I paid $3.08 in NW Indiana last night on my way back into Chicago.

    • 0 avatar
      j.grif

      Most of the gas and diesel comes into Michigan from a pipeline that originates from farther south than Indiana, this per our fuel vendors in metro Detroit, we operate a large trucking company and have i ground storage, tanker every week or so.

    • 0 avatar
      jpolicke

      “have they found the cause of the huge explosion yet?”

      Well, take calcium carbide [which breaks down to acetylene in contact with water] and store it with CNG and ammonium nitrate. Then wait for a fire. And throw in some sodium cyanide for fun. Apparently hazmat regulations bear the weight of strong suggestions. Like the “rules” about lead free paint.

      And each of those thousands of cars had a gallon or 2 of gas.

  • avatar
    craiger

    In Michigan the state excise tax is 19 cents per gallon. 22.4 cents more in sales tax. 18.4 cents federal excise tax. Total tax: 60 cents per gallon.

    American refiners buy crude roughly 50% at WTI prices (West Texas i.e. domestic) and 50% at Brent prices. So, going by this weeks closing spots, figure an average of $43.50 per barrel. So, figure $1 per gallon of crude.

    Now, roughly, you need 1.33 gallons of crude to get one gallon of gasoline. So, raw cost for the refinery for the crude feed stock to refine one gallon of gas: $1.33

    So, $1.33 + 60 = $1.96.

    Now, the refinery has to make some money on it. Plus they have to pay to ship the gasoline to the stations, either by truck or by pipeline. The gas stations obviously have to make some money.

    I just looked at gasoline prices in Michigan. It’s about $2.40 a gallon.

    So, nobody is making big money off of gasoline. Except the tax man.

  • avatar
    gasser

    Here in Los Angeles,, regular is still aroung $4 per gallon. Crude oil price and taxes are about the same as in the Midwest, but California requires fairy dust be added to our fuel. This is undoubtedly the reason for the extra $1.25 per gallon we pay. Refiners can make more money refining lower volumes…a amazing turn of the “free” market.
    No wonder that the Prius is the single best selling model in California.

    • 0 avatar
      golden2husky

      Don’t know if NY gas has “fairy dust” in it, but I just paid $3.69 for 93 at a Sunoco station…I really don’t see much in the way of super low prices….even regular is just under $3.00

  • avatar
    craiger

    Gasoline in California costs much more (over a $1 per gallon) than the national average because of state regulations that make electricity very expensive (electricity is the second biggest cost to refineries) and also because of the special gas blends required by CARB.

    You’re paying more for gas in Cali because your laws make it cost more.

  • avatar
    carguy

    Sure Iran – pick up the phone and call the Saudis – but I doubt they will be very sympathetic.

    • 0 avatar
      jpolicke

      Should be a real constructive meeting:

      “Allright, you Sunni apostate lapdogs of the Great Satan, listen up. Thanks to our masterful diplomacy the cowards in Washington have capitulated and we’re back in business. The market price for our only exportable commodity is nowhere close to where we need it to be to run our economy and simultaneously pursue our completely peaceful nuclear research program. This means that supply has to tighten. We have taken the liberty of drawing up some suggestions for output reductions – completely voluntary on your part, of course, just as we are voluntarily withholding our support for insurgents operating in your countries. In other words, nice little country you’ve got there, be a shame if some Shiite happened to it.”

  • avatar
    schmitt trigger

    My intent had been to read theonion.com
    But the autocomplete in my browser filled in thetruthaboutcars.com when I hit the enter button.

    So for a few seconds I actually thought I was reading The Onion, and was thinking to myself “now, this is absurdly funny” until I realized I was on the wrong web page and the story WAS actually serious.
    Or maybe not….

  • avatar
    Hummer

    I paid $2.14 today near Raleigh, I saw on my gas buddy app that some areas closer to the coast were as low as $2.10.

    About to check South Carolina, I’m betting on less than $2 a gallon.

    Edit: Yup, Columbia and Myrtle beach hanging around $1.95, saw one spot at $1.86. If it weren’t for NCs fuel tax being twice as much as SC we would be all over that.

  • avatar
    Joe K

    2.51 a Gallon here in Nassau County just east of NYC for regular gas at Sunoco

  • avatar
    ReSa

    Unleaded at USD 7.1 per gallon here in the Netherlands.

    Stop complaining, fill up your gas guzzlers and be happy :)

  • avatar
    Blaz

    It was about time for this sucker to go down!

  • avatar
    brettc

    Gas is about $2.50 while diesel is currently at about $2.34 here in Southern Maine. I looked at my Fuelly records and I haven’t seen diesel that cheap since about 2005, just before Katrina hit. Hopefully it continues on for a while. Propane is also about $1.90/gallon to lock in for the winter, which is much better than the $3 plus that it cost a couple years ago.

  • avatar
    RS

    When will the US join OPEC? OPEC should be thanking the US for not allowing full exporting – yet.

    It is interesting that none of the peak oil guys planned on new technology to find/recover crude. OPEC is crazy to think they can turn that off with their supply manipulation. The next time prices go up, supply will to.

    ..and demand doesn’t seem to be increasing.

Read all comments

Recent Comments

  • stuki: Station wagons are being eaten alive, sales wise, by compact CUVs (and mpvs) in Europe. More cramped cities,...
  • stuki: I suppose a skyscraper could be sold for the price of a bungalow as well……. Perched higher, both...
  • RHD: Crude oil prices aren’t tied to the political party in the White House. That’s silly rhetoric....
  • RHD: There are several advantages. Even if you don’t enjoy choosing when to upshift or downshift, there is...
  • RHD: Twice a day, unless you’re in the military.

New Car Research

Get a Free Dealer Quote

Who We Are

  • Matthew Guy
  • Timothy Cain
  • Adam Tonge
  • Bozi Tatarevic
  • Chris Tonn
  • Corey Lewis
  • Mark Baruth
  • Ronnie Schreiber