Energy In-depth: Gas Prices Make Unexpected Jump, AAA Says

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GAS PRICES MAKE UNEXPECTED JUMP, AAA SAYS
Pump prices in Arkansas and across the nation have unexpectedly climbed higher even though many market experts continue to believe prices are nearing a seasonal high due to the completion of seasonal refinery maintenance and abundant crude oil supplies, the AAA reported this week.

The national average price for regular unleaded gasoline moved higher each of the past six days reaching Thursday’s average of $2.80 per gallon. That price represents a new 2015 high, and the national average is five cents more than one week ago and 10 cents more than one month ago.

AAA says gas prices unexpectedly have jumped in many areas over the previous week due to a decline in gasoline stocks caused by high fuel demand and persistent refinery problems, which has limited gasoline production. Despite the rise in pump prices, drivers continue to experience significant year-over-year savings with today’s average price about 86 cents per gallon less than the same date last year.

Posted prices for regular unleaded in Arkansas are averaging about $2.55 per gallon, compared to $3.46 a year ago. To check local prices across the state, click here.

OIL PRICE DECLINE SPREADS PAIN TO OILFIELD SERVICE FIRMS
As oil prices slumped more than 50% over the past year, the rates that oilfield service firms receive for goods and services used in producing oil and natural gas has also taken a dive, according to the Bureau of Labor Statistics Producer Price Index (PPI).

From June 2014 to May 2015, when the oil and gas prices as measured by the PPI fell by 49%, the PPI by industry classification showed the following changes:

• Rates for drilling activities, which primarily represent service fees for contractors to drill oil and gas wells, declined by 19.6%.
• Rates for support activities, which include the surveying, cementing, casing, and otherwise treating wells, declined by 1.4%.
• The price of sands primarily used for hydraulic fracturing declined 12.5%.

Meanwhile, for the first quarter of 2015, ending March 31, a group of 14 drilling companies represented in the OSX index (an index of oil and gas service companies) experienced a first-quarter year-over-year decline of 91% in net income, decreasing from an aggregate net income of $4 billion to $352 million.

In the same period, a larger group of 57 North American independent oil and gas producers experienced a collective year-over-year decline in net income of 574% from $2.9 billion in net income to a loss of $13.9 billion, as reported by the U.S. Energy Information Administration.

FORMER CLINTON ADMINISTRATION OFFICIALS WORKING ON GAS-TO-LIQUIDS SUPERPROJECT
Arkansas may score another superproject coup if a full-scale gas-to-liquids (GTL) processing refining facility developed by two former top Clinton administration officials – Gen. Wesley Clark and Rodney Slater – and a team of energy industry veterans comes to fruition. Read more about this major economic and energy development at this link.

ARKANSAS DRILLING RIG COUNT FALLS TO 5 STATEWIDE, LOWEST IN A DECADE
Arkansas’ rig count has fallen to its lowest level in more than a decade as drillers and oilfield equipment companies have cut back substantially on upstream oil and gas capital projects for the remainder of the fiscal year.

According to the Baker Hughes weekly rig count, the number of rigs operating in Arkansas is now down to only five, a level not seen since the week of May 5, 2005. A year ago, there were 11 rigs actively drilling for oil and gas across the state of Arkansas. Talk Business & Politics offers more analysis at this link.

DOE PARTNERSHIPS TO HELP THE GRID ACCOMMODATE MORE RENEWABLE ENERGY
The Energy Department’s National Renewable Energy Laboratory (NREL) announced five new partnerships that will award up to $6.5 million in federal funds to technical teams throughout the country. The cost-shared projects with industry, universities, and other stakeholders will address the challenge of enabling the nation’s electric grid to handle increasing amounts of renewable energy.

NREL is managing the project and all of the teams will test their technologies in NREL’s national laboratory. To learn more, click here.