$4 Gas is a Gift for Drivers

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$4 Gas is a Gift for Drivers By Keith Kohl | Friday, March 2nd, 2012 I stopped to fill up my tank on my way into the office this morning, and when the pump reached $30, I felt a little uneasy... I became increasingly uncomfortable as it ticked past $40. That discomfort turned to anger when it finally stopped just above $51.00. For most people, buying gasoline is an increasingly painful experience. With gasoline prices averaging more than $3.70 per gallon in the United States, it's difficult not to cringe every time you lift the nozzle from its cradle and watch the dollars and cents roll past. But the truth is I should feel lucky to have paid only $50 to fill my tank... My readers on the West Coast are used to paying over $4 a gallon. And if you think the pain at the pump is bad now, just wait until summer. Advertisement Sell Exxon! It should be the best of times for the oil giant... So why did it recently miss earnings estimates? And why are analysts lowering earnings estimates for the rest of the year? The fact is Exxon's growth is over. There's a new generation of small oil companies that have secured a 24 billion barrel oil reserve in the Western U.S. They're lean, mean, and they're making investors wealthy. Get the details here. The summer driving season is right around the corner, and I have a feeling we'll be wishing gasoline cost $4/gallon come August. For all my disdain for shelling out that much to fill up my tank, I was relieved not to be the guy at the pump next to mine this morning — and not because he had a higher bill... No, it was the fact that once he topped off, he pulled his truck around to fill up a second tank on the other side! The string of expletives this poor guy muttered while filling up this second tank wasn't fit for a sailor. He was blaming everything under the sun for high gas prices and the beating his wallet was taking... Fortunately, we know better. Scapegoats Abound Who's to blame? Who's the main culprit here? It's simple enough to see what goes into the price of a gallon of regular gasoline (see right). According to the Energy Information Administration, 76% of the price of regular gasoline is from crude oil. So why aren't we buying into the fact that it's just the speculators driving up oil prices? Once you peel back the veil behind U.S. oil production, you'll understand why prices are expected to average $112 a barrel this year, as well as that the oil being pumped today isn't the cheap, easy-to-get-to stuff we're used to... Advertisement What's Fueling Nuclear's Freaky Comeback? Secretly — throughout the entire world — nuclear power plants are breaking ground at an alarming pace. They're popping up everywhere, as fast as possible, in every continent, with hardly a worry of future meltdowns... And it's all thanks to this company's revolutionary fuel. It's not only making investors filthy rich, but it's making meltdowns a worry of the past.  Behind the Production Curtain It's no secret that oil production here in the States is rising. It's been a major talking point for both the media and politicians. And yet, it's still a challenge to find someone in either the media or politics that has a real sense of what's going on. Yes, production is rising. Since 2008, our domestic output has jumped by more than 700,000 barrels per day, or about 14%. If you'd like to see how small that bump actually is, look no further: Now, depending on who you're listening to, the reason for this varies greatly... First, understand that a large percentage of that increase is due mostly to just two states: North Dakota and Texas. North Dakota managed to tack on 246,000 barrels to their daily output, while Texas' output grew by 348,000 bbls/day. These two states combined account for 83% of our 700,000 bbls/day increase over the last several years. But there's a glaring problem in all of this... The shale oil that has been added to the mix since 2008 comes with a price. It costs millions to drill these wells. And no matter how great the news is that production is heading higher, these costlier barrels aren't cheap. Our conventional crude supply continues to dwindle while it's being replaced with more non-conventional sources: shale oil, deepwater wells offshore, and bitumen from the oil sands resource in Alberta. Simply put, it's taking more energy for us to extract each barrel of oil than ever before. As to who gets all the credit for the good news, you might want to hold your applause for the president... Interestingly, oil and natural gas production federal lands declined 40% during the last decade. So the good news isn't coming from the White House, but rather the private and state lands in areas like North Dakota. For us, finding profits in the U.S. oil patch has never been easier. Until next time, Keith Kohl @KeithKohl1 on Twitter A true insider in the energy markets, Keith is one of few financial reporters to have visited the Alberta tar sands. His research has helped thousands of investors capitalize from the rapidly changing face of energy. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital as well as Investment Director of Angel Publishing's Energy Investor. For years, Keith has been providing in-depth coverage of the Bakken, the Haynesville Shale, and the Marcellus natural gas formations — all ahead of the mainstream media. For more on Keith, go to his editor's page.   Related Articles Presidential Oil Lies Solution to U.S. Dependence on Foreign Oil Is There a Top in Sight? Is British Columbia the New Bakken? From the Archives... Lost $2 Billion Betting on Natural Gas Prices 2012-03-01 - Nick Hodge How to Fill Your Gas Tank for $1 a Gallon 2012-03-01 - Stephanie Ginter On The Verge of Another Overreaction 2012-02-29 - Nathan Holl Watching an Asian Trade War Erupt 2012-02-29 - Keith Kohl Abound Solar and First Solar Losses 2012-02-29 - Brianna Panzica

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