We Interrupt Today's Gasoline Price News

In Alberta everyon eis aware that drilling activity started to slow down last season, however, the May/07 stats are very misleading. I was in Edson last week and had no problem getting a hotel room as the hotel was virtually empty. This is very unusual in Edson at this time of year. The resaon is that the ROAD BANS are still on which prevents a lot of oilpatch activity. 06/07 was a very different winter than 05/06. I suspec that last year the road bans were lifted by early April. Anyone out there know for sure??? Another reason that activity is down is that a lot of oilpatch service companies had huge labour problems and due to high wage expectations many operators simply turned away work rather than raise the bar to high for salary expectations. This may be coming to bite them on the @ss.

It's not all road bans. A lot of projects are being canceled. I think the price of labour & material has finally outstripped corporate greed. Here comes 1983!

Will the people of Saskatchewan ever become sufficiently jealous enough of Alberta's prosperity to vote for a party other than the N.D.P?

It is interesting how China manages to pay high prices for SS, CS, copper and lead, while Canadians can't afford those.

Lets hope Saskatchewan and Manitoba continue to vote for the NDP. This has contributed enormously to Alberta prosperity!!

I am seeing it all over the patch. Hotel rooms very easy to come by (which has been unusual for the last 2 or 3 years), drilling activity down etc. My mom back in Saskatchewan has said that there are a lot of Albertans (ex-binder pilots I'm assuming) snapping up houses back in Saskatchewan. I would guess that high cost of living here in Alberta and high costs of labour etc is starting to take its toll. I know many oil service companies were really starting to jack up their prices and the oil companies have decided to put the brakes on things.

The current road bans exaggerate the figures but the oilpatch is slowing down nonetheless. The service companies were becoming much more profitable than the oil and gas producers that hire them. Something had to give.

The hyper-stupid Calgary housing market will soon follow. A builder told me yesterday that trades are actually starting to call him for work. Something that hasn't happened in years.

I was shocked to learn when talking to a buddy recently that drilling has simply stopped. My buddy’s servicing business is steady but it seems to be drilling that’s the problem and it’s weird how it just ground to a halt.

We joked that perhaps it's self-imposed Kyoto.

Speaking of the Calgary housing market ...

I'm told by realtors that the number of houses on the market while the number of buyers continues to decline; and I have heard that 2/3 of people buying new homes are buying them under the assumption that they will make a profit when they sell them in 6 months.

My brother is a geologist for an oil company and he said the price they got to do a well identical to one they did last year was 30 or 40 percent more so they just decided to cut their drilling program. Service companies were getting greedy and now the oil companies are gonna bench them for a while.

Like johnboy, I've heard that the oil companies are just applying the brakes. Things will start again when service companies fall back in line.

dwo: "In Alberta everyon eis aware that drilling activity started to slow down last season, however, the May/07 stats are very misleading. I was in Edson last week and had no problem getting a hotel room as the hotel was virtually empty. This is very unusual in Edson at this time of year. "

Yep, I've been told the same thing by people in Edson. Things are starting to slow down. People there are well aware that the boom will end sooner rather than later.

Something had to give, better a somewhat-gentle correction than the huge one that would have came if things kept going as they were. although I think a big correction is still a possibility.

The Bear: "I think the price of labour & material has finally outstripped corporate greed."

Johnboy: "I know many oil service companies were really starting to jack up their prices and the oil companies have decided to put the brakes on things."

Johnboy: "Service companies were getting greedy and now the oil companies are gonna bench them for a while."

Yep, been seeing and hearing the same thing here in the Consort AB area. Was talking to a fairly senior person at Penn West while doing some computer work for him, and he told me that a lot of the drilling service outfits are having their leashes snapped as their rates were WAY out of line with reality.

The drilling will resume when those providing the service are reasonably affordable again.

We're seeing empty motels and restaurants in my area. The amount of traffic on the highway -- rig moves in particular -- is way, way down. I don't mind that last bit as the family and I have nearly been killed a few times over the past year by morons in big oil patch trucks doing damn stupid things.

I can add to Sean's observation, we have a large rig moving company with a branch office here. They laid the entire staff off at the beginning of break-up. Didn't even wait a couple of months as is the usual scenario. I know of a pipeline company that doesn't have any new projects until fall and that's for old tie-ins. Of course, I see there's a few bust-cycle deniers, maybe they paid too much for a house and don't want to see what's coming. New truck sales are also a bit off from last year, car sales are up though I think that the price of gas is influencing purchasing.

What we are witnessing is a good old-fashioned sweating.

Total and Statoil (!!) have announced that they are investing in the tarsands. 12 months from now we will be as busy as ever.

WHEN MY BROTHER WORKED ATA GAS STATION IN THE 60S IT WAS 35 CENTS

WHEN I OWNED A TYPEWRITER IN THE 80S MY CAPS LOCK KEY GOT STUCK. LUCKILY, THIS WAS BEFORE THE INTERNET AND NO ONE ACCUSED ME OF SHOUTING.

jeez in the 60's it was as low as 26 cents a gallon. wages were at the high end in 64 about 1.90 an hour.

IIRC in '74 when I was a "petroleum technician", regular gas was around .42 per gallon and premium a few cents more. The price would change maybe a couple of times a year and it was a major undertaking to change all the prices on the pumps. Motor oil was 1.06 a quart for 30W, 1.15 for 10-30

So gas has gone up roughly ten fold since then, while motor oil prices have increased at a much slower pace, as you can still find plain old motor oil for around 2-3$ a litre..

No simple answer here: labour costs, corporate greed, road bans, soft natural gas prices from a warm winter last year. Things will get going again LATE this summer and increased activity as we go into this fall. The corporates have share holders to report to and commitments to exploration, it will get going again but its going to take 4 - 6 months.

The simple fact is that companies do not want to over extend crude supplies and crash the price....temporary slow down to allow the barrel proce to recover a bit more before they extract what they are capable of.

I wonder if not wanting to over extend crude supplies is only part of it.

There is plenty of motivation for both Government and Big Oil to keep supplies to the pumps scarce as well.

They both see the booming sales in Prius and other hybrids, the 20% fuel efficiency savings through use of TDI in ICE, and the coming wave of battery only EVs starting with delivery fleets and municipalities.

As yet there is no road tax collection in place for the electric power side of all this new tech.

Lower gas prices are not very likely to show up anytime soon. = TG

Seems the drilling companies have been phoning the oil companies offering 10% off. LOL. By fall they should be falling in line.

TG: what is the upside for the government to keep supplies scarce??

The government and "big oil" both wanted to get going on a new refinery out east but the enviro's are the one's holding things up. Seems to me it's the greenies that have the most interest in keeping gas prices high. If the oil companies wanted to keep us addicted to oil they would not want to charge a price that would be driving people to buy electric vehicles, fuel efficient models etc. As this would lower demand for gas.

Go feed the eco-wackos to the polar bears strand them in the wilderness where the wolves,cougars and bears can get a crack at them and let them CALFORNIA CONDORS finish the left-overs FEAT TIME GUYS SQUAWK SQUAWK

This slowdown is completely forced and not at all natural. Oil companies can try and adjust their margins but in the end they have to answer to shareholders as well.

This summer's slowdow was rumored since last Christmas. Oil execs are playing cute but they will soon find that market forces are stronger even than oil boardrooms.

Johnboy,

The upside of higher gas prices for governments are the bigger tax returns.

For big oil its better profit margins. Less refining & shipping = more profits.

Try not to swallow the BS about new refinery wishes unless you are talking about bio-fuel refining.

Big oil is not stupid. They see the hybrid and EV writing on the wall and want to keep prices where they still profit from paints, plastics and chemicals.

With all the new fuel efficient vehicles and the coming standard of 35 MPG or better being established, the free market price of gasoline should be 59 cents per litre, not $1.29.

Free market my butt! = TG

NIMBY?

I live right next to an industrial district.

Put in a refinery. I'm OK with it.

(TG: Note that depending on the location, gas taxes might be fixed per unit, rather than percentage.

I'm pretty sure US federal and most US state taxes are cents-per-gallon, not percentage-of-price, though some state and especially city/county taxes are.)