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AAPG Pacific Section and Rocky Mountain Section Joint Meeting

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Hitting the Jackpot During Previous HitOilNext Hit-Previous HitGasNext Hit Price Collapse: The Consumer


The Previous HitoilNext Hit, Previous HitgasNext Hit and oilfield services industries are experiencing a ‘commodity cycle’ of monumental proportions. The industries are the victims of success from hydraulic fracturing. Low prices, basement-level rig counts, bankruptcies, back-to-back cuts in capital expenditures, and layoffs are some of the consequences. There's another side to this, which is the impact of lower Previous HitoilNext Hit and natural Previous HitgasNext Hit prices on consumers. The 2016 Previous HitannualNext Hit Previous HitreportNext Hit for the Previous HitCommitteeNext Hit on Energy Economics and Technology, part of AAPG's Energy Minerals Division (Previous HitEMDNext Hit), estimated savings to consumers based on pre- and post-shale era pricing, tied to the single year 2015. The resulting figure is $775 billion, in that year. This astonishing number combines impacts in the U.S and, where documentable, worldwide. It accounts for how hydraulic fracturing first caused natural Previous HitgasNext Hit oversupply and price collapse (an additional side-effect being lower costs of wholesale electric power), which led to a focus on higher value Previous HitoilNext Hit and liquids-rich plays, which injected 4 million barrels per day into the global Previous HitoilNext Hit market after about 3 years, which was the primary driver of the collapse of world Previous HitoilNext Hit prices beginning in 2014, which drove down the cost of Previous HitoilNext Hit-price linked liquefied natural Previous HitgasNext Hit and internationally-traded pipeline Previous HitgasNext Hit. 2015 consumer savings add up roughly as follows: (1) US natural Previous HitgasNext Hit, residential-commercial-industrial sectors, $37.9 billion per year (B/yr), plus electric sector $48.1 B/yr, (2) US gasoline, diesel and jet fuel, $221 B/yr, (3) global Previous HitoilNext Hit, less U.S., principally Canada, Europe, major Asia Pacific countries excl. China and India, $366 B/yr, (4) global natural Previous HitgasNext Hit, less U.S. — centered on European pipeline trade, $30 B/yr and (5) LNG, principally top five Asia Pacific countries incl. China and India, $52 B/yr. These estimates do not require cherry-picking to produce an inflated result, but straightforward combination of statistics from U.S. Energy Information Administration, International Energy Agency World Previous HitOilNext Hit Market Previous HitReportNext Hit (May), BP 2016 Statistical Energy Review (June), International Previous HitGasNext Hit Union 2016 World LNG Previous HitReportNext Hit (April) and its 2016 Wholesale Previous HitGasTop Price Survey (May).