Friday, July 09, 2010

The BP Oil Spill and Gas Prices

British Petroleum (BP) is one of the largest oil companies in the world. For now, many economists say that the BP oil spill will not have an impact on gas prices. The oil rig that exploded was an explanatory rig and the current oil supply is high which is an indicator that gas prices will not increase. However, the oil spill could interfere with shipping lanes by disrupting the ability of oil tankers to get crude oil to refineries.

The oil spill could slow the growth of offshore oil exploration and drilling which could have significant price impacts in the future. Stricter regulations that could be imposed in the future could also slow the pace of growth of offshore drilling and increases gas prices in 2011.

Oil is produced at a rate of 200,000 gallons a day. The oil spill will not affect our oil reserves because it would take 208 years to deplete the U.S. oil supply. The Obama Administration has currently banned deep-water drilling which could decrease the current oil supply.

Our existing oil reserves contain more than 362 million barrels and each barrel contains approximately 42 gallons of oil. Oil refineries in the U.S. are running at 88% capacity so oil is not affected right now. There is also a large supply of foreign oil.

Oil prices will probably increase at the end of 2010 or the beginning of 2011 as a result of the current oil spill because output will decrease.

The BP oil spill has hurt its 10,000 distributors of gas most of which are independent dealers. BP plans to give distributors a discount which in turn will trickle down to independent dealers. If you are concerned about gas prices you could buy a hybrid or electric car such as the Toyota Prius, Chevrolet Volt or Ford Transit Connect Electric van.

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