What a difference a glut makes

Two and a half years ago, we were talking about $4 gas.

There were calls for more deregulation. There was more pressure to build the Keystone XL Pipeline.

But as it turns out, all that was necessary for gas prices to go down was for Saudi Arabia to cut oil prices – which they’ve done in hopes of hanging on to their market share.

Just like that – we’re talking about $2 gas.

“There’s no doubt that this incredible drop in oil is a surprise to just about all of us,” says Chris Tomlinson at the Houston Chronicle’s Business Desk.

Houston in one of the few cities where seeing oil prices near $65 a barrel is bad news.

“Everyone knows that it’s hard to frack and make money below $65,” he says.

Since oil companies are in business to make money, not lose money, guess what’s going to happen.

“At this price we’re looking at a minimum of losing 500 oil wells between now and this time next year,” says Tomlinson.

As for the Keystone XL pipeline project, which is designed to carry oil from Canada.

“Canadian oil produced from tar sands is among the most expensive in the world. Make no mistake, if there’s no one producing that oil in Alberta, to fill that pipeline, it makes no sense to build it. At least, in the short term,” says Tomlinson.

Look at that. One of those rare times environmentalists might actually be happy to see cheap oil.