As drivers face a bomb-sticker crash, CBS Mornings is taking a look at how U.S. oil production relates to rising gas prices.
The AAA says the national average for a gallon of gasoline is now $ 4.24. But the reference price for crude oil, which is much higher for oil producers, is about $ 114 a barrel, much higher than last year.
While this is a pain for consumerscan be a help for small oil well operators like Columbus Oil Co. in Oklahoma: One of the 400,000 “treatment wells” operating in the United States, Darlene Wallace, CEO of Columbus Oil, operates 13 such wells near Seminole, producing up to 15 barrels a day. .
“Well, that’s why they call them sewage wells, because we’re removing the last bit of oil from the well that we can possibly get,” Wallace told CBS News correspondent Omar Villafranca.
Oil prices have been especially volatile over the past five years, and the boom and fall of the oil patch can have a major impact on small producers like Columbus Oil.
“All of our wells closed when it went to a smaller number in April and we closed everything because you can’t pay someone to come pick up your oil,” Wallace said.
Their wells were closed for two months.
“It was like not getting paid,” he said.
Now, with rising gas prices, the story is different.
“This is like my fund for rainy days, so I’m going to pay bank money and wait for this accident to come because it will come. This business is very cyclical,” Wallace said.
Ed Hirs, an energy fellow at the University of Houston, says that even though oil is booming, it is not easy to light bombs. It may take months to put them online and the workforce, although recovering, has been beaten.
In the last 10 years, the sector has lost more than 50,000 workers.
Hirs said it is “absolutely true” that the U.S. has enough domestic supply to relieve the pain in the bomb, but it requires capital.
“Our wells are not the most productive in the world. Our wells are the most expensive oil wells in the world to drill because we don’t get the huge production that, for example, a Saudi well has,” he said. “It’s just a matter of dollars and cents, and no one will start drilling unless they can see a way forward for revenue and profits.”
Wallace will not slow down and plans to continue boosting the production of its small wells.
“The wells are in the countryside. They are not in the urban areas,” he said. “And we employ people in rural areas. We can’t let our rural areas dissipate because there is no work.”
Wallace says he may not help Wall Street, but he does help Main Street.
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- Gas prices
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