As we head into 2014 the price of gasoline is rising slightly in San Antonio, but the good news for motorists is the fact that the shale oil boom is expected to hold prices down in the new year, 1200 WOAI news reports.
"The good news for motorists is that we do not anticipate that gas prices will be higher in 2014 on a yearly average," Patrick DeHaan, a senior market analyst at GasBuddy.com tells 1200 WOAI news.
The price of regular in San Antonio today is right at $3.09 a gallon. That is u slightly in the last week, and it is up a few cents from the last week of 2012.
But DeHaan says in 2014 we will begin to feel the impact of vastly increased production in the Eagle Ford Shale and Klein Shale in Texas, as well as in the very productive Bakken Shale in North Dakota. All three fields are expected to see production of more than a million barrels of oil per day in 2014.
The United States is now the leading energy producer in the world, thanks almost completely to horizontal fracking, which has been able to mine the billions of barrels of oil which are trapped inside shale formations 12,000 feet and more below the surface.
DeHaan says we won't see prices fall sharply for two reasons. One is that, regardless of where gasoline is produced, it remains a commodity traded on the international marketplace. Secondly, the costs of horizontal drilling are substantially higher than traditional oil production, and without world oil prices in excess of $70 a barrel, the fracking would stop.
The U.S. Energy Information Institute expects the world spot price of West Texas Intermediate, the world benchmark crude, to be $95 a barrel in 2014, down from an average of $97.64 in 2013.
DeHaan says worldwide demand is rising, and, without U.S. production and other shale and tar sands oil production in Canada and elsewhere coming on line, we would expect to be paying $5 to $6 a gallon at the pump today.
"Chinese demand for crude oil has increased tenfold just in the last fifteen or twenty years or so," he said, adding that demand for oil from other rapidly industrializing Third World nations like India and Vietnam is also soaring.
Another tangible benefit from increased U.S. production, DeHaan says, is that nutty moves by bellicose Middle Eastern dictators will no longer be able to send world spot prices soaring. Many analysts believe that in the last decade, whenever Iran found itself in need of cash, one of the Ayatollahs would simply threaten to nuke Israel, specifically to send spot prices of crude soaring. No more, DeHaan says.
"Those shock waves from the price of foreign crude and rises and falls," he said. "We will be a lot less subject to those."