Hitting the Jackpot During
Oil
-
Gas
Price Collapse: The Consumer
Abstract
The oil
,
gas
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
oil
and natural
gas
prices on consumers. The 2016
annual
report
for the
Committee
on Energy Economics and Technology, part of AAPG's Energy Minerals Division (
EMD
), 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
gas
oversupply and price collapse (an additional side-effect being lower costs of wholesale electric power), which led to a focus on higher value
oil
and liquids-rich plays, which injected 4 million barrels per day into the global
oil
market after about 3 years, which was the primary driver of the collapse of world
oil
prices beginning in 2014, which drove down the cost of
oil
-price linked liquefied natural
gas
and internationally-traded pipeline
gas
. 2015 consumer savings add up roughly as follows: (1) US natural
gas
, 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
oil
, less U.S., principally Canada, Europe, major Asia Pacific countries excl. China and India, $366 B/yr, (4) global natural
gas
, 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
Oil
Market
Report
(May), BP 2016 Statistical Energy Review (June), International
Gas
Union 2016 World LNG
Report
(April) and its 2016 Wholesale
Gas
Price Survey (May).
AAPG Datapages/Search and Discovery Article #90266 © 2016 AAPG Pacific Section and Rocky Mountain Section Joint Meeting, Las Vegas, Nevada, October 2-5, 2016