Average gasoline prices in Florida have continued to decline, with prices dipping below $3 a gallon in some areas as demand has slowed.
Prices in the Palm Coast area are ranging between $3 a gallon and $3.25, with lower prices prices further south: around $2.84 a gallon at Buc-ee’s and Sam’s Club along LPGA Boulevard in Daytona Beach.
The AAA auto club said the average price of a gallon of regular unleaded Monday in Florida was $3.16, down 12 cents from a week earlier. AAA spokesman Mark Jenkins said prices are the lowest since December 2022 and that about 20 percent of Florida gas stations have gas costing below $3 a gallon.
“The seasonal decline in driving demand, coupled with gasoline supply builds and falling oil prices are all contributing to the recent pump price drop,” Jenkins said in a statement. “Expect these low prices to hang around through the holidays, unless oil prices suddenly spike or there’s an unexpected disruption to fuel supplies.”
The Pensacola area was averaging right at $3 a gallon, while the Crestview-Fort Walton Beach area was at $3.01, and the Orlando area was at $3.05, according to AAA. Meanwhile, for example, the West Palm Beach area averaged $3.35 a gallon. The statewide average was 35 cents lower than a month ago and 30 cents less than a year ago. The national average Monday was $3.42 a gallon.
–News Service of Florida and FlaglerLive
Laurel says
Interesting that this article went a week with no comments. Well, I’m gonna go fill up my tank. It’s around $3.18 today.
Ray W. says
Hello Laurel,
Two disparate issues.
In November’s EIA Short Term Energy Report, the agency reports that gasoline consumption is expected to drop to the lowest level in two decades, for three reasons. First, people drive less during the winter. Second, internal combustion engines are becoming ever more efficient. Third, record numbers of electric vehicles are being sold. No wonder American energy companies are not building very many new refineries and are closing old ones rather than refurbishing them for future use. Since winter fuel is less expensive to produce and since all of America’s refineries have completed the annual shift from summer blends to winter fuel, prices were already expected to drop.
And, ever since Governor DeSantis engaged in a photo-op at an oil well in Texas and claimed that the current administration is waging war on America’s energy industry and later claimed that, if elected, he would ease the process for obtaining permits in order to expand exploration efforts to find additional sources of oil and natural gas, I have been gathering various points from industry articles better understand the possible validity of his claims.
I should note from the beginning that the international energy industry is extraordinarily complex, with myriad upon myriad of variables, so any possible account must be couched in relatively vague terms. But for purposes of this comment, the most important term the average FlaglerLive reader will need to understand is “pay zone.”
I do not argue that we should abandon in any way the great variety of current efforts to expand renewable sources of energy. I will always argue that recent technological breakthroughs and improvements in all phases of the field of renewable energy provide ample evidence that renewable energy sources provide the best answers to solving our current and future energy needs. Nonetheless, I cannot ignore that the world is extracting over 100 million barrels of crude oil per day, alongside huge supplies of natural gas. We simply cannot turn off that facet of the energy industry. My position is that the hidden hand of the marketplace, when unmolested by artificial means, i.e., subsidies to conventional energy companies, will steer the world toward renewable energy sources. Since solar and one form of wind power is already less expensive than any other current form of electricity production, with the promise of additional reductions in costs in the future, that is where the world should be directing its efforts. Cheap and reliable sources of energy are needed to power societies all over the world.
Every five years, the EIA publishes its long-term energy outlook report. In its 2020 report, the EIA published “levelized” projected costs of producing electricity over the next five years, based on a study of 243 generating plants in 24 countries. The costs are expected to be in the following estimated ranges:
Coal-fired generating plants: Around $110 per megawatt hour.
Nuclear generating plants: Just under $70 per megawatt hour.
Natural gas generating plants: Just under $50 per megawatt hour.
Off-shore windmills: Just over $60 per megawatt hour.
On-shore windmills: Just under $40 per megawatt hour.
Solar (utility scale) farms: Just under $50 per megawatt hour.
But improvements in the economics of producing energy are not limited to electrical generating plants.
In a different industry article, the author estimated that between 2010 and 2020, American energy companies had reduced the average industry cost of extracting crude oil by 36%. While there are many factors that impact the overall average cost of extracting oil, it is estimated that the current average cost per barrel of drilling and fracking a long-term producing well is now approaching just over $25 per barrel. Of course, much of the cost occurs up-front in the process, because you have to drill and frack before you can extract, and that process is arguably the most expensive cost factored into the decision to drill. And, it costs more to extract oil in North Dakota than it does in the Permian Basin covering much of west Texas and east New Mexico, mainly because trucks transport the extracted North Dakota oil to railheads, where the oil is transferred to rail cars for transport to Nebraska, where the oil is transferred to pipelines, including the southern leg of the XL pipeline, for transport to Houston area refineries or for export to refineries in other areas of the country or to other countries. The Permian Basin, producing crude oil for over a century, already has a number of pipelines crisscrossing the entire field, so transport costs from the Permian Basin to the Houston area are far less than are the costs of transporting crude oil from North Dakota.
Nonetheless, the Texas Railroad Commission, the agency that oversees crude oil production in Texas, reports that the Permian Basin, arguably the most productive basin in the United States, now produces 5.4 million barrels of crude oil per day, up from just over 900,000 barrels per day in 2010. This fact alone prompts the question of just why Texas and New Mexico are producing some six times the oil that it produced only 13 years ago, even in the face of two administrations that allegedly were and are waging war on America’s energy industry. As usual, I went digging through Texas Railroad Commission reports, among other sources.
The Permian Basin is home to three distinct basins that overlap: The most westward is called the Delaware Basin. The most eastward is called the Midlands Basin. Then, there is the Central Basin. This huge shale formation holds enormous amounts of crude oil, now estimated at some 50 billion barrels, not counting the huge amounts of corresponding natural gas reserves, but more reserves are proved at a consistent rate. Geography being what it is, shale formations are not uniformly distributed throughout the Permian Basin. For example, according to the Texas Railroad Commission, some shale rock formations are only a few hundred feet below ground, while others are two miles deep. Some formations are relatively thin and other shale rock formations are extremely thick. For purposes of this comment, I will use a uniform thickness of 500′ when describing exploratory drilling for oil.
First, I wish to point out that vertical drilling is different from horizontal drilling. If an energy company wants to drill a new well in the Permian Basin, it must drill vertically down to a shale rock formation and then drill horizontally into the formation in order to extract the most oil per bore. Vertical drilling costs money, too, so it is to the advantage of American energy companies to own already-existing vertical wells in the Permian Basin. This is where the economics becomes really interesting.
ExxonMobil just announced its purchase of Pioneer Energy for $59.5 billion dollars. Pioneer Energy owns large swaths of land in the Delaware and Midlands Basins. And ExxonMobil just bought a pipeline for $5 billion. Other smaller energy companies are being bought by larger companies. Why would such large sums of money be spent if the current administration is waging war America’s the energy industry? And why would the Permian Basin be producing some six times the amount of crude oil that it produced only 13 years ago if the current administration is waging war on America’s energy industry?
So, I looked up the current number of producing oil wells in the Permian Basin. As of 2021, according to the Texas Railroad Commission, the Delaware Basin has 17,450 active oil wells. The Midlands Basin? 27,540. I couldn’t find a report on the number of active wells in the Central Basin on the Commission’s site, so I went to a different source and found that there are 94,833 active wells in that region of the Permian Basin. If these counts are accurate, and they are likely low, because current records show that vertical oil drilling rigs are currently active in the Permian Basin, that means about 140,000 active wells already exist throughout the entire basin.
I dug further. In 2010, the average vertical well in the Permian Basin had been drilled horizontally three times. Now, the average is barely over six times. And the average horizontal bore extended 3,879′ in 2010. Now, the average length of the horizontal bore is 10,064′.
It is now time to explain the “pay zone” term of art used in the drilling industry. If a shale rock formation is 500′ thick and a well is vertically drilled two miles down to reach the shale rock, the “pay zone” is 500′, because an 11,000 foot long vertical well yields only 500′ of possible oil for extraction. But, if the vertical well is already drilled and the horizontal well is drilled 10,000 long, then the pay zone is the same as the drill length, i.e., 10,000′. The longer the pay zone, the greater the financial yield for each bore.
According to the Texas Railroad Commission, each new horizontal drill initially yields 960 barrels of crude oil per day, but the yield will diminish over time. The answer is that when the well production drops below a certain level, the well can be redrilled in a different direction, like spokes radiating out from a wheel hub. If each new 10,000′ long bore yields a new average of 960 barrels of oil per day, then at roughly $80 per barrel, would this explain why ExxonMobil now owns Pioneer Energy, plus a pipeline, after spending $64.5 billion?
I sought an answer to the maximum possible number of horizontal drills per vertical well. The University of Texas, Arlington sits over a large natural gas formation. Years ago, the university decided to explore the field. It set up a vertical well on the outskirts of the campus and drilled. Natural gas was found. It has since been drilled horizontally 22 times, the most that I found listed on the Texas Railroad Commission site.
As an aside, since transporting crude oil can engage interstate commerce, the federal government can regulate the transportation of oil. But drilling vertically and then horizontally is not necessarily part of interstate commerce. So, the Texas Railroad Commission is responsible for issuing permits to drill either vertically or horizontally within the boundaries of Texas. So, I looked up the number of issued permits. In 2014, the Commission issued 10,966 permits, even though the administration of the day was waging war on American energy companies. In 2018, it issued 7,163 permits, though the war had suddenly ended during that administration. Through April of this year? 1726 permits, which yields a total of 6,800 expected permits for the years. We already know why the number of permits is dropping, because we know that horizontal bores are getting longer and longer. We don’t need to drill the same number of wells to get the same amount of oil, if each horizontal well is longer in length.
The summary of the above lengthy analysis is that Texas controls the permitting process in much of the Permian Basin, not the federal government; that Texas is reaping its fair portion of the economic benefits of a six-fold increase in production from the Permian Basin over the past 13 years; that the average bore length of a new horizontal well is nearly triple the average distance in 2010; and, that American energy companies are reaping vast sums of money from the increased crude oil production throughout America.
So long as American oil companies can obtain roughly $80 per barrel of oil, they will continue to drill and frack wherever it is the most economically feasible to do so. Right now, the most economically feasible area to drill is the Permian Basin. There are roughly 140,000 existing wells waiting to be drilled and fracked and then redrilled and fracked again and again and again. And the Texas Railroad Commission is ready and able to issue the necessary permits. But, if American energy companies produce too much oil, or if OPEC+ decides to end its voluntary reduction in production, then crude oil prices will drop, and American energy companies will stop drilling new horizontal wells. When the pandemic hit in 2020, crude oil prices dropped for a short time below $30 per barrel, which at that time was the break-even point for the average American oil well. The number of active drilling rigs plummeted from 779 the week before prices began to plummet to well under 300. When prices rose again during the current administration, due to OPEC+ production cuts, the number of active American drilling rigs began to rise, hitting 760 in recent months. America is producing a record 13.2 million barrels of crude oil per day, an all-time record, according to the EIA, with predictions of new records next year.
I end with a question for each FlaglerLive reader. Does reason tell you that the current administration is waging war on America’s energy industry, in light of the facts listed above?
Does reason tell you that, if elected president, Governor DeSantis will be able to change Texas’ permitting laws, as overseen by the Texas Railroad Commission?
Laurel says
Ray W.: Thanks for the extensive research and details!
Even though DeSantis does like to deal with Texas, especially ridding it of legal aliens, I imagine the answers to both questions are no. Snowing the American public is an American pastime. We watch as a little duckling, that is covered in oil from an oil spill, get cleaned by Dawn. Why Dawn? It’s a petroleum product. But it’s so cute.
Now, here is an everyday fact for the everyday fuel consumer. If you purchase your gas in the morning, it is concentrated by the the cooler weather and you get a bit more.
Here’s what I personally wonder: with the constant extraction of oil beneath the Earth’s surface, what about the gaps left behind? Usually, the Earth has a reason for the way it is, and then humans…
Ray W. says
Three completely different questions.
As to the use of Dawn to clean ducklings, it seems a little industry hype is going on, but not completely. But three different terms need definition:
1. Astringent: a substance used to remove an oily substance from skin. For example, alcohol is an astringent. One of its many uses is to lift naturally produced oils from skin. But that does not mean that it breaks down the bonds between complex hydrocarbon molecules, such as those comprising a naturally produced body oil.
2. Solvent: a usually liquid substance capable of dissolving or dispersing one or more other substances. For example, gasoline is a solvent. When two-stroke oil is premixed with gasoline, the gasoline does not alter the molecular structure of the lubricating oil; it merely disperses the oil into a mix or blend; the oil can still lubricate the various moving parts within the engine, such as main or big and small end rod bearings or cylinder walls.
3. Surfactants: a substance which tends to reduce the surface tension of a liquid in which it is dissolved. For example, soaps are designed to actually break apart the weak chemical bonds that hold together complex hydrocarbon molecules. Crude oil coating a pelican after an oil spill is defined as a complex volatile hydrocarbon (regardless of the brand, all gasolines are comprised of a blend of approximately 150 different complex volatile hydrocarbon molecules, which is why refining crude oil is call “cracking”). That means that over time, in a process known as weathering, some of the crude oil evaporates, leaving behind a very thick form of weathered crude oil. When a pelican is brought in for treatment, vegetable oil is sprayed onto the weathered crude oil, to thin out the substance. Then, a soap is applied to the bird to loosen the tension or natural bonds that holds the crude oil molecules together (picture putting part of a cloth in a glass of water. The water will climb upwards through the cloth and then over the side, eventually lowering or emptying the water from the glass; it is the tension between water molecules that allows this process to occur.) Once the crude oil separates into individual molecules, it can be washed from the pelican’s body, legs and feathers. Dawn, being a surfactant, can be used to clean crude oil from pelicans. But there are different types of surfactants. Each soap product uses a blend of different surfactants. Palmolive designed an entire generation of advertising around how it does not damage human skin. Apparently, Dawn contains a mix of different surfactants that does not irritate the skin of birds, or it is at least less of an irritant than is other products.
All three terms are at least partly synonymous, but each is unique in some way. None of them actually breaks the strong bonds of the complex molecules, but each has a different purpose.
Yes, gasoline molecules contract in cold weather. This is why you should not overfill your gas tanks. Every gas tank is designed with the top of the filler hose fitting to the tank at a point slightly below the top of the tank. It is one thing to overfill a tank and then drive for some distance. But, with ground temperatures of around 70 degrees and hot August ultra summer temperatures of 100 degrees, if you overfill the tank and drive two miles to your driveway, you are likely to soon see gasoline dripping out of the filler opening, particularly on older cars that lack the charcoal drain tanks used on newer cars.
If anyone thinks the international marketplace of petroleum-based energy products is complex, it is not when compared to geological formations.
I happen to agree with Governor DeSantis’ executive order that bans all drilling and fracking for oil in the state and in the waters around Florida; he signed it very early in his first term. Yes, Florida has had oil wells for decades and they are still producing oil, but no new ones can be drilled. Florida has an aquifer that encompasses much of the state. If some form of oil spill were to seep into the aquifer, then it could spread throughout Florida, however slowly. The risk of tainting drinking water far outweighs any benefit to be gained from drilling for oil. This was the main problem with the northern leg of the XL pipeline. Only a small segment of the proposed pipeline traversed the Nebraska Sand Hills region, but that region sits over the vast Oglala Aquifer, from which farmers in multiple states and other individuals draw their water to irrigate crops and use in their homes. Since tar sands crude oil is relatively thick to begin with, it has to be diluted with a chemical that is highly toxic and carcinogenic in order to ease pipeline transport. If the pipeline were to break in the sand hills region of Nebraska, the oil and the diluting chemical would relatively quickly permeate through the sand and enter the waters of the aquifer. All the Canadian company had to do to get the necessary permits was to divert the pipeline around the sand fields. It consistently refused to add the necessary 75 miles or so to the length of the pipeline. The risk to the water supply to millions of people, including thousands of farmers, was simply much greater than any possible reward.
Unique geological formations make any answer to your question difficult. While Florida’s aquifer is huge, the rock formations over the aquifer differ greatly. Anyone flying into OIA will see thousands of small lakes, some larger than others. These, occurring over many millennia, are mainly from sinkholes. The rock formation in much of central and central western Florida is called “karst.” When the limestone dissolves from water interaction, sinkholes can form. Most of eastern Florida’s bedrock is not karst formation. The rock is not limestone. In my childhood, my siblings and I helped a man drill a well at our home on the beachside. The drilling progressed rapidly until he hit bedrock roughly 20′ down. Punching the drill through the rock formation took several hours and then we were in the aquifer. Intrigued by this experience, when the News-Journal ran an in-depth article about a lawsuit involving flooding in a large subdivision west of I-95, I read it closely. The engineer hired by the plaintiffs described the rock layer west of the highway as being some 6′ below the surface and the rock layer was relatively impermeable. Thus, in heavy rains, the water couldn’t drain through the thin layer of sand and then through the impermeable rock. The developer did not tell prospective homeowners of the flooding issue. I once looked to buy a home in that subdivision. Very nice home on a five-acre lot. But the pool had floated when the water level in the pool had dropped due to neglect. It popped out of the ground like a boat. When the water level in the soil dropped, the pool settled back into its proper place, but the pipes had all ruptured when it floated up. Basically, according to the engineer quoted in the News-Journal article, almost all of Volusia and Flagler County is sitting of a layer of impermeable rock that rests above the aquifer. During periods of heavy rain, the water percolates through the sand and then hits the rock. It can only go sideways at that point to the lowest elevation of the rock layer. So, after days and days of heavy rain, it simply sits as a lake in people’s backyards until it evaporates or slowly permeates through the bedrock. If the layer is 20′ below the surface, then flooding is less of a problem. Six feet? Much greater problem. Streets and driveways create their own problems, because they are raised, and the sideways flow of surface water is impeded by whatever drainage system each city requires for each subdivision. Years ago, two of our judges lived at the end of a DeLand street. They never experienced flooding problems. The State extended S.R. 92 from S.R. 17 through to Spring Garden Road. The new raised roadway lacked drainage and the old waterflow away from the judge’s street was impeded by the new raise roadway. Their homes immediately began to flood in heavy rains. At one time, my father was a Daytona Beach city commissioner. A developer came to the commission for approval to build small homes on a large tract of land near Our Lady of Lourdes on the beachside. The city voted to require adequate drainage and raised sidewalks and curbs, where previous neighboring communities did not have these improvements. Over the many decades of my life, I have repeatedly read of drainage problems in the older neighborhoods, but never in that subdivision. The builder, facing greater development costs, could only make money by building more profitable larger homes. Today, on the beachside, that subdivision remains one of the nicest in the city. My father had a political enemy for life, but the commission did the right thing.
If crude oil is contained in a shale rock formation that is one mile below the surface, extracting it is not likely to cause a depression of the soil above it. There are, however, stories of California farmers who are drawing down the water from their aquifer. The loosely packed aquifer soil in those areas compacts when the water table is drawn down. I have seen pictures of three- or four-foot drops in paved and dirt roadways as the soil above weighs down on and compacts the soil of the aquifer, leaving large gaps in the roads. The aquifer, now compacted, cannot be replenished. There are articles about microearthquakes in Oklahoma, allegedly caused by fracking. The authors of the studies very well might be right. It makes sense that hydraulic fracking can cause microearthquakes, which in turn could cause disruptions in underground aquifers.
Laurel says
According to NPR, a Dawn rep stated that Dawn is less than 7% of petroleum ingredients. So, petroleum is definitely present to help break up the petroleum on the duckling. The ingredients are a secret.
Also in the NPR story:”I think it’s extremely ironic,” says Martin Wolf, a chemist for Seventh Generation, which makes a dish liquid without petroleum. “Here we are trying to squeeze every last drop of oil we can out of the Earth, and it’s despoiling the Earth. And we’re using that same product that’s messing up the Earth to clean it up.”
Having been born and raised in Florida, I am very aware of the rock and soil formations, especially in the south and central portions of the state. That’s not my concern. I wonder how mass draws of oil will eventually effect the areas the oil has been drawn from. Not so much aquifers, but the tectonics of the planet.
The fun of shale is breaking it open. While in Wyoming, my friends took me to an old shale pile where coal was once extracted. The shade breaks open easily, and displays a lot of fossils, mostly of plants where we were. I happen to love rocks!