Stupid is as stupid does and after Exxon Mobil, the world's largest publicly traded oil company, reported net income of $9.4 billion for the quarter, up from $9.25 billion the year before and revenue of $121.6 billion, up 16 percent from the year before, T. Boone Pickens seemed to suggest that they were stupid. You see Mr. Pickens, according to the AP, after his company, Clean Energy Fuels, announced a deal with truck maker Navistar to make more vehicles that run on the abundant fuel and build more fueling stations, seemed to suggest that the only way to bolster U.S. natural gas prices and cut the market's massive oversupply is to stop drilling. Mr. Pickens said that, This country is so overwhelmed with natural gas that the only way to get prices up is to stop companies drilling gas wells, Pickens said at a news conference to promote the Navistar deal, which advances his aim to break U.S. dependence on oil for transport. Don't be afraid that this deal will be made and we will wake up in a year with natural gas prices three or four times higher, Pickens said.
Yet Exxon Mobil said that they will keep producing and why not? They are not only the largest producer in the US, they could be one of the only ones. Mr. Pickens may be worried that Exxon will grab market share and drive some smaller gas companies out of business and perhaps make some of his investments less profitable.
Still if you want to build demand for natural gas powered cars the best way is cheap natural gas. It will create demand and it may have to get a bit cheaper. In Chicago we are seeing natural gas cabs. On an typical shift in a normal cab the drivers pay on average $50 to $55 fill the tank. For the natural gas cabs it's about $30-$35 equivalent. But the hybrid cabs are even cheaper coming it at $25 or $30. We may need to see even lower prices to push the technology forward.
Oil did a slow fade as we expected. Refining issues have kept products elevated yet the market big picture is heavy. The Energy Information Agency reported a very low refinery rate for this time of year. U.S. crude oil refinery inputs averaged 14.2 million barrels per day during the week ending January 27, 89 thousand barrels per day below the previous week's average. Refineries operated at 81.8 percent of their operable capacity last week. Gasoline production decreased slightly last week, averaging 8.5 million barrels per day. Distillate fuel production increased last week, averaging 4.5 million barrels per day.
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