Drivers paying less at the pump due to free-falling oil prices can thank the U.S. energy boom for generating shale oil – and weakening OPEC’s ability to keep the cost of a gallon of gas high.
In just a matter of months, the price of a barrel of oil has dropped from more than $100 to about $70, and gas is now cheaper than it has been in years. But a recent report conducted for the American Petroleum Institute claimed oil would cost twice as much as it does now if it weren’t for America’s fracking boom, which wrings oil and natural gas out of shale miles underground.
But the next question could be whether the fracking industry can survive the low prices it brought.
“The shale boom is on a par with the dot-com boom,” Russian oil baron Leonid Fedun of OAO Lukoil told Bloomberg. “The strong players will remain, the weak ones will vanish.”
OPEC, the cartel of oil-producing nations that has historically been able to calibrate the price of oil – and ultimately gasoline – by increasing or decreasing supply, announced Thursday that it won’t fight the price skid by cutting production this time. That likely means prices will continue to fall, and the more costly production technique of fracking could become cost-prohibitive, say experts.
Drivers have benefited in recent months from the falling prices, the API study found.
“This reduction in petroleum product prices have saved U.S. consumers an estimated $63 to $248 billion in 2013 and estimated cumulative savings of between $165 and $624 billion from 2008 to 2013,” stated the report.
Read complete article via How low can it go? Oil, gas prices in freefall as OPEC reels from US fracking | Fox News.