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How Much Lower Will Gas Prices Go?

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    NUS Consulting Co-President Richard Soultanian on the outlook for oil and gas.

  • Duration 4:53
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Brent crude oil hit an eleven week high after lawmakers -- -- the fiscal cliff so.

What prices why why -- prices at the -- going down when oil prices are going up joining us now.

Richard -- -- he is and US consulting co president Richard good to see you -- -- he's got okay answer the question it's.

It's -- -- -- but we see your -- continue to go up today significantly and gas prices coming down.

-- gasoline stockpiles have been going up -- month we've were as low as about 210 million now we're about 223 so in the last three or four weeks stockpiles have grown very quickly why is that well I think we're getting more throughput through the refiners right now there was a sort of -- we switch over for winter gasoline things is such so.

I think that back up is sort of cleared its way through so stockpiles are growing.

Now as a result of that.

He was seeing prices come down a bit but more importantly usage is coming down we've seen last month November my -- last month is now two months ago but the last statistics we saw.

Gasoline usage was the lowest it's been since the year 2000.

Only eight point five million barrels per day were consumed so we're seeing stock now starting to grow.

And we're seeing consumption driving so you think the price may be pressured down to below three dollars a gallon yes he I think you know.

I see things slightly differently than some your previous guess we think the price of oil's gonna slide in the first half year.

-- yes we dodged the bullet on -- the fiscal cliff but we don't have an oncoming train which is the debt ceiling so.

With that -- we've got increased taxes we've got some real headwinds in the economy new taxes coming in payroll tax now gonna come back the expiration the holiday.

Put that altogether -- you think the economy's gonna have some significant headwinds.

That's gonna slow things down.

A lot of unresolved issue -- and in Europe so supply is plentiful demand is slack with that we think will -- despite the only two things that are supporting price today.

By the Fed which hasn't really aggressive easing policy.

And geopolitical tensions we still have some real issues and in Italy -- freighter now folks.

Just so that you don't think he's just as speaking his mind based on nothing does this guy.

Is paid a lot of money by companies all over the world to consult with them to give them an idea -- how much they're gonna be paid for how much they're gonna pay for gasoline.

In the future I'm wondering if companies like airlines and and FedEx all the transport companies are going to benefit tremendously their stock might benefit from this in 2013 -- certainly look that the people who are really heavy fuel users the airlines -- you said you know transportation companies delivery companies they're certainly gonna benefit they've certainly hedged a portion of their consumption going forward out.

So they -- benefit completely from this but they will take some benefit from it.

Really our clients are very focused on the natural gas markets.

Don't purchase all of your needs going out for the next six months take advantage of some of this decline we want to be.

Partially -- but not completely -- so we can sort of get some of this pullback in the market as occurred we have heard a lot of optimism here about natural gas for good reason because we're finding that we have so much of it here in the US.

And the Chinese have a lot of it over -- consider when did they.

The price pressures from the glut of natural gas begin to impede.

On the oil producers when -- they begin to permanently.

Bring down the price of oil and thus gasoline.

Well -- you know I think right now what you're seeing is a switch over from coal to natural gas with a lot of electricity some -- generators they've been moving over because it's been much more cost effective to -- to gas what does that gets put pressure on gasoline.

I don't I don't not sure it will until we had an it domestic energy policy.

That sort of supports.

This transition -- that the PT -- PO plans -- -- the Pickens Plan.

Talks about the transition.

You know heavy trucks and you know eighteen wheelers over to natural gas or liquefied natural gas.

It's a great idea because those trucks one possibly they're they're really high usage their big you know wrote -- no road kill hogs.

But no one's gonna do that in a large way until the infrastructure to support that.

Why would you convert your trucking fleet if you can't steal it up but there are some questions about there's so much money being reported a natural gas right now when research if they found a way of making liquefied natural gas.

Much easier to make much cheaper to make and therefore gave the natural gas company's US -- excuse or reason to export it.

Overseas wouldn't that put pressure on offshore oil and gas we've -- start issuing some licenses to export natural gas have that in the real question will be.

It will take time to build that infrastructure right now we've been geared.

To really takes in energy not really push it out.

So as a result of that it will take us a year to to build the the terminals the the Soviet the ability to export into the into the global market bottom line know that the cheapest gas will be at the pump in 2013 look I think we'll breached three in the first half of the year in May not be long lived.

But then most talked -- ninety's to 89 outlook hopefully and that remains I'd like to since Richard salt -- -- -- US consulting culprits are great to see again banks -- -- -- much less --

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