Energy stocks have been hit hard by falling oil prices, and they are leading a broader market sell-off
U.S. stocks have opened the first full week of 2015 with a steep decline, with the Dow Jones industrial average dropping 331 points, as falling oil prices weighed on the energy sector.
Oil prices continued their months-long decline Monday, with the price of crude briefly falling below $50 per barrel for the first time in more than five years earlier in the session on account of global oversupply. Concerns over the worldwide oil glut heightened in the past week as both Russia and Iraq posted record oil supplies. Energy companies have suffered as a result of the falling oil prices and industry stocks were hit hard again to start the week.
Chevron was recently down more than 4% in early trading — a drop that knocks roughly $8 billion off the energy giant’s market cap. Meanwhile, Exxon Mobil fell more than 3% this morning and BP dropped almost 6%. Oil field services company Halliburton has suffered as well and was also recently down nearly 3%.
The energy industry losses caused the broader U.S. market to slump, with the Dow Jones industrial average lately down more than 240 points, or about 1.4%. The blue-chip index has dropped about 17,600 points in almost two weeks after crossing the 18,000-point mark for the first time in history late last year.
The broader S&P 500 index was lately down 1.3%, while the Nasdaq composite fell about 1%. The Nasdaq is down a little more than 1% so far in 2015, while both the Dow Jones and the S&P 500 have dropped around 1.3% since the start of the year. All three indices finished 2014 on a fairly strong note, with the Dow Jones gaining 7.5% on the year, while the S&P 500 improved by almost 12% and the Nasdaq gained more than 13%.
Another potential factor in the day’s market drop was news of more troubles in Europe. The euro fell to its lowest level against the dollar in nine years Monday, driven by fears of political turmoil in Greece and hopes for more monetary stimulus from the European Central Bank.
You can thank booming crude output, falling demand and a strong greenback+ READ ARTICLE
The average price of a gallon of regular gasoline in the U.S. has dropped 12¢ over the past two weeks, reaching a four-year low, a national survey finds.
Lundberg Survey said Sunday that the average price of regular gasoline has reached $2.72 per gallon, the lowest price since November 2010, Reuters reports.
Lundberg in part attributed the dramatic falloff to a spike in crude-oil production in North America. The Organization of Petroleum Exporting Countries last month decided not to cut crude-oil production to contend with a U.S. shale-gas boom and falling oil prices.
Other factors include a slowdown in demand for gas and a strengthening of the U.S. dollar, Lundberg found.
The most expensive gas in the lower 48 states was in San Francisco, where it goes for $3.04 per gallon. The lowest price was in Albuquerque, N.M., where it’s $2.38 per gallon.
Though the stock market tumble has been scary, there are some upsides to all the bad news.
With the market down more than 7% in the last month, it’s easy to feel fearful for the parts of your life most immediately affected by a rocky financial world — like retirement savings and job security.
But a downtrodden market like this one can create pockets of opportunity for investors and consumers alike. Here are just a few ways you can benefit from the recent pullback.
1. Cheaper gas prices
Thanks to a supply glut and low demand, gasoline prices are hovering at less than $3 a gallon across the United States. And that’s despite international geopolitical unrest, which usually keeps oil expensive.
2. Low interest rates on mortgages
The Fed is keeping short-term rates low, and the sell-off has sent investors into Treasury bonds, driving down the yields that serve as a benchmark for borrowing costs throughout the economy. So mortgage rates have taken a big dip in the last month.
Interest on a 30-year fixed-rate mortgage is now 4.01%, which means that if you’re sitting on a much higher rate from buying a home a few years ago, now could be a very opportune moment to refinance. Though the paperwork might be intimidating, letting inertia get the best of you could mean leaving literally tens of thousands of dollars on the table.
3. Stock-buying opportunities
When the market takes a big dive, it can be a good moment to purchase stocks, especially if your goal is to buy and hold for the long term. This is particularly true for younger people who have time on their side, as they stand to lose very little in the short term (even if stocks continue to drop) and can gain much more when the market eventually recovers.
So if you are a millennial and have been putting off opening (or upping contributions to) that 401(k), now is your moment to choose a plan. And even Gen X-ers generally have enough years ahead to take on some risk in their retirement portfolios.
Finally, if you’re not a driver, homeowner, or investor, there’s always that trip to Paris you’ve been putting off: Thanks to economic uncertainty in Europe, the Euro is trading for less than $1.30—the cheapest it’s been since last summer.
The favored fuel of Europeans could be in 10% of US cars by 2020
This post is in partnership with Fortune, which offers the latest business and finance news. Read the article below originally published at Fortune.com.
By Ben Geier
The word “diesel” probably elicits one of three reactions from most Americans: A disgusted comment about black smoke, a curious glance that says they don’t know what diesel is, or a story about the time they accidentally put diesel in their engine and worried they’d ruined their car.
All that could be changing, though. Steve Kiefer, the General Motors’ vice president who oversees engine production, said in a speech Tuesday that he thinks 10% of the U.S. market could be made up of diesel cars by 2020, echoing past statements from GM executives.
As of right now, only one GM car, the Chevrolet Cruze, is available in the U.S. with a diesel engine. Some heavy-duty pickups are also available with diesel as an option. Several more could be coming in 2016, according to a report onAutomotive News. The Chevrolet Colorado and the GMC Canyon will be available with diesel engines in 2016.
The Chevrolet Cruze diesel will be the first of many diesel-powered passenger cars General Motors will offer in the United States, Kiefer said in his speech.
Lauren Fix, an automotive columnist who goes by the title “The Car Coach,” said she agrees, and that diesel’s image is changing stateside.
“Diesel today is about performance,” she said. “Its a great alternative to a hybrid, because what you lose with a hybrid is towing capacity.”
For the rest of the story, please go to Fortune.com.
The national average for gas prices experienced the largest drop in July in six years, according to AAA
The direction that gas prices have been heading in during peak vacation and road trip season should put smiles on the face of American motorists.
As of July 31, the AAA Fuel Gauge Report listed the national average for a gallon of regular at $3.517, roughly 3¢ less than a week ago, 16¢ less than one month ago, and 11¢ less than prices at the pump at this time last year. What’s more, AAA announced that gas prices fell in 30 out of 31 days in July, helping to bring about the biggest decline in prices at the pump in July in six years.
This is the first time ever recorded that gas prices have fallen so consistently in July, which is a month when gas prices are generally prone to soar. The highest national average ever posted remains July 2008, when prices spiked to a panic-inducing $4.11.
“Falling gas prices are nearly the opposite to what we usually see this time of year,” said AAA spokesman Avery Ash. So what explains the decline? “Refineries are running at full tilt and there is more than enough gasoline in the market, which has helped bring down prices despite multiple overseas conflicts.”
And what can we expect going forward? Well, gas prices have dropped in August in three of the last five years. But prior performance is no indication of what’ll happen in the future—just look at gas prices recently, which have fallen during a time period when they have skyrocketed in the past.
Even so, the experts at AAA anticipate that gas prices will continue on a downward path in the days and weeks ahead, provided there are no major hurricanes, refinery problems, or unforeseen international conflicts—any of which could send fuel costs up and up. For now at least, the idea that gas prices peaked for 2014 in early spring is still holding up.
New research shows that funky, futuristic auto stop-start technology is a proven money saver on gas. It's available right now only in a tiny fraction of cars, but that's going to change soon.
Over the years, one urban fuel-efficiency myth has been pervasive—that you’ll save gas by letting your car idle rather than shutting the engine off when, say, waiting at the curb for someone running into a store. Popular Mechanics, AAA, and others have busted this myth, pointing out that a vehicle gets negative miles per gallon while idle. The consensus advice now is that if you car is stopped for more than a minute, the smart move is to turn the engine off.
The arrival of auto stop-start, a technology most often seen in hybrids, does this work for you, and not only if you’re idle for minute or more. As the name suggests, the tech shuts off the vehicle’s engine automatically when the car comes to a stop—at a red light, say—and then starts it again in the jiffy when the driver takes a foot off the brake pedal.
The technology has slowly been spreading beyond hybrids to a few vehicles powered by traditional internal combustion engines, and new research from AAA indicates that this is a good thing. After testing several cars with the feature, researchers concluded that the tech is a no-brainer that saves drivers 5% to 7% on gas costs annually. A blurb from the press release explains a little more about what this means to us all:
“Up to seven percent improved fuel economy can mean a $215 annual fuel savings for Southern California consumers,” says Steve Mazor, the chief automotive engineer of the Auto Club’s Automotive Research Center. “It also reduces the main greenhouse gas emitted from cars (CO2) by 5 to 7 percent in city driving.”
Navigant Research predicts that by 2022, 55 million cars sold annually will have stop-start technology, up from 8.8 million last year. Adoption is ahead of the curve in Europe, where gas prices are astronomical compared to much of the world: Roughly 45% of cars built in Europe already come with start-stop systems.
In the U.S., meanwhile, the stop-start feature remains an anomaly; only about 500,000 new cars sold in the U.S. in 2013 had the technology. Estimates call for that figure to shoot up to 7 million by 2022. But there’s no need to wait. The vehicles below already offer stop-start as an option or a standard feature in the U.S.:
BMW: Several BMWs have auto start-stop technology, but not all drivers are fans. “The stop-start system is just awful,” one Automotive News columnist wrote of his 2012 328i, describing the herky-jerky feeling of stepping off the brake and automatically restarting the engine as “balky” and “uncomfortable.” Drivers do have the option to turn the start-stop feature off if it’s proving to be too annoying.
Chevrolet Impala: The automaker has made stop-start technology standard on the 2015 Impala.
Chevrolet Malibu: Starting with the 2014 model year, Chevy made stop-start standard on the Malibu, which the automaker says has helped it boost fuel efficiency by 14% with city driving.
Ford Fusion: A couple of years ago, Ford introduced a stop-start system as a $295 option for the first time in the U.S. on a non-hybrid model. At the time, the automaker estimated that drivers would save $1,100 in gasoline costs over five years of driving by upgrading to stop-start. The 2015 Fusion is estimated to get an extra 3 mpg over the base model.
Ford F-150: Buyers who go for the 2.7-liter EcoBoost engine on the 2015 version of Ford’s best-selling pickup get a special auto stop-start feature that’s a little different than others out there. Like other systems, this one automatically shuts off the engine as a fuel saver when the vehicle is stopped, but not when the vehicle is towing something or when it’s in four-wheel drive. Without that feature, the tech could prove frustrating for pickup drivers who are hauling something in the rear or are inching along stop-and-go on bumpy or muddy terrain. During all other driving situations, “The engine restarts in milliseconds when the brake is released,” Ford promises.
Porsche: Among the Porsche models that come with auto start-stop, the new Panamera’s system is special in that the engine not only shuts off when the vehicle is at a full stop—but it also shuts off when the car is slowing down approaching a traffic light. While the engine goes quiet, climate control, audio systems, and other interior features remain powered by the battery. And if the battery doesn’t have enough juice for all the auxiliary equipment, the engine will simply turn back on.
Ram 1500: The 2013 model year Ram truck offered start-stop technology as an option, the first in the pickup category to do so. “This new system is just one of the advances that allow the 2013 RAM 1500 to offer up to 20 percent greater fuel efficiency than previous models,” the automaker stated.
If civil war engulfs all of Iraq, oil prices are likely to skyrocket. But U.S. exports could change the game
Even though the conflict in Iraq still rages, with forces from the Islamic State of Iraq and Greater Syria (ISIS) just an hour outside of Baghdad while the Syrian military is reportedly bombing the insurgents, global oil markets have mostly calmed. Prices for Brent crude on June 26 had fallen below $114 a barrel, and have dropped more than 1% since hitting a nine-month high on June 19. The violence in Iraq’s north and west—including fighting around the country’s largest refinery in Baiji—hasn’t yet seriously affected oil production in the Shiite dominated south. Iraq’s Oil Minister Abdul Kareem al-Luaibi even promised in an interview with Bloomberg that the nation’s oil exports—which have averaged more than 2.5 million barrels a day—will actually accelerate next month. “Oil exports will witness a big increase, as recent events didn’t reflect negatively on Iraq’s crude output and exports,” al-Luaibi said. “International oil companies are working normally in Iraq.”
That doesn’t seem to be quite true, though—international oil majors like BP and ExxonMobil have already evacuated some of their foreign workers from Iraq. And if things do get worse, oil markets might not react so calmly. A recent report from the nonprofit Securing America’s Future Energy found that the loss of just a third of Iraq’s oil output could be enough to push global oil prices up as much as $40 per barrel. Even if production from Iraq stays steady, political turmoil in countries like Libya and Nigeria have helped remove some 3.5 million barrels a day of oil production capacity. That doesn’t leave much room for more trouble in Iraq, the world’s third-largest exporter of crude oil. And with Iraq projected to be the biggest single contributor to new oil production over the coming decades—at least before the ISIS insurgency revved up—what happens in the country will matter at the pumps for a very long time.
But it’s not so easy to predict the future of energy and oil. Case in point: the fracking revolution in the U.S., which has unlocked vast amounts of previously inaccessible crude, and which few experts saw coming. Between 2008 and 2013, U.S. oil production increased by 2.4 million barrels a day, to more than 7.4 million. And the growth hasn’t stopped—production hit 8.3 million barrels a day in April. Most of the new global oil production brought online over the past few years has come from the U.S. While the U.S. doesn’t export raw crude—aside from a few small exceptions, U.S. oil exports have been banned since 1975—more oil at home means fewer imports, which in turns leaves more oil on the global market for everyone else. Take away the fracking revolution, and global oil markets wouldn’t have been able to so easily shrug off the violence in Iraq.
In the years to come, the U.S. could play an even bigger role. As the Wall Street Journal and Reuters reported earlier this week, the Obama Administration has begun taking steps towards allowing U.S. crude exports. If that wording sounds confusing, well, it is. What seems to be happening is that the U.S. Commerce Department will allow a pair of oil companies to begin exporting what is known as ultra-light condensate to international markets, with only minimal refining. (The U.S. has long allowed exports of refined oil products.) That doesn’t mean U.S. oil companies can begin exporting all the crude they want; in fact, both Commerce and the White House, reflecting the political sensitivities around allowing domestic exports at a time when gasoline costs an average of $3.68 a gallon, have insisted that there has been “no change in policy on crude oil exports.”
But with domestic oil production approaching the capacity of U.S. refineries—and the oil industry putting all its considerable pressure on the government—it seems likely that U.S. oil will eventually be sold abroad. What effect that will have domestically is uncertain. A recent report by Goldman Sachs found that the ban on exports was a net economic positive for the U.S., at least until domestic refineries could no longer handle growing production of oil. But it seems clear that lifting or at least modifying the ban would likely lead to more production, as oil companies wouldn’t have to worry about their product being landlocked in the U.S. A report by the research firm IHS found that lifting the ban would lead to more than $700 billion in additional investment in oil extraction between 2016 and 2030, and would increase oil production by an average of 1.2 million barrels a day. And given that global crude demand is expected to rise by about that much over the next several years, that oil could be very useful indeed—especially if today’s fighting in Iraq is only the beginning.
Drivers are turning to grocery stores and retailers to fill their gas tanks
Your favorite gas station is also likely your grocery store, according to a new study.
Consumers prefer filling their gas tanks at grocery stores and wholesale clubs, not traditional gas stations, Market Force Information found in a study. Grocery and wholesale retailers have figured out that competitive pricing can lure customers away from traditional gas pumps.
“The rise of grocery and wholesale clubs is formidable in the petro-convenience sector, with the ability to use loyalty cards and point systems driving consumers to fuel where they perceive they get better value,” said Market Force CMO Janet Eden-Harris in a statement.
Researchers asked consumers how likely they were to return to the gas station they most recently used, and found that Kroger ranked first in satisfaction with a score of 79%. Costco and QuikTrip tied for second with 78% and Sam’s Club ranked third with 76%.
While location is the biggest factor in attracting customers to the pump, over a third of drivers (37%) said they were willing to drive past a gas station to go to their favorite brand. That said, Shell is the most frequented gas station in the country, likely because the company’s gas stations are so ubiquitous.
Market Force surveyed over 5,300 respondents across the United States and Canada for the study.
Right now, prices at the pump are as expensive as they've been all year. With any luck, though, it'll be all downhill from here.
According to the federal Energy Information Administration, as of Monday, the national average for a gallon of regular gasoline reached $3.70. That’s 13¢ higher than a year ago at this time, and it matches the previous high thus far in 2014, set in late April.
The bad news, beyond the obvious—you know, having to pay more to fill up and all—is that prices have been creeping upward just at a time the opposite was supposed to happen. The expectation was that gas prices would actually decrease in June, as they have in each of the past three years. The summer forecast from AAA called for a 10¢ to 15¢ per-gallon drop in prices at the pump this month, and predicted that the national average would remain in the vicinity of $3.55 to $3.70 through the summer. We’ve already hit the high end of the predicted price range long before anticipated—and gas prices have tended to rise toward summer’s end in recent years.
That said, prices at the pump aren’t exactly spiking. Nationally, the per-gallon price is only up a few pennies compared to a week ago, or even a month ago for that matter. Still, because everybody was expecting a significant decline this month, drivers are justified in feeling like they’re paying a lot more than they should to gas up right now. Turmoil in Iraq is being blamed for the persistently high gas prices.
So what’s the good news here? While drivers in 41 states and Washington, D.C., are currently paying more for gas than they did at this time last year, a handful of states are starting to see price breaks. According to the gas-pricing monitoring site GasBuddy, Indiana, Ohio, and Michigan drivers have all seen a per-gallon price decrease of 9¢ to 12¢ over the past week. And areas that have experienced a gas price hike lately can expect prices to flatten out going forward. “Many areas that saw gains over a nickel should see a calmer, cooler week at the pump,” a GasBuddy post on Monday explained. “So far this morning, oil prices are down 55 cents a barrel while gasoline spot prices are generally negative, a good sign for motorists.”
Then again, the analysts have been wrong before. Like when they were making predictions just a few weeks ago, for instance.