Oh, Los Angeles, we know you love to hate fracking. But like a lot of controversial science, it has its upsides.
The L.A. City Council has already said not in my backyard to fracking, largely because environmentalists fear that the process of pushing pressurized liquid into rock formations to squeeze out oil contaminates ground water and possibly even triggers earthquakes.
But you can partially blame our 4-year-low gas prices, with some stations today charging an unheard-of $2.99 a gallon, on that very process Angeleno liberals so loathe.
The average price of a gallon in Southern California is $3.347, according to the Automobile Club of Southern California, which today stated this:
A few gas stations in Los Angeles, Orange County, the Inland Empire and San Diego have posted prices below $3 a gallon for the first time since 2011 as gas prices continue a dramatic slide downward, falling by double digits in most areas for the second straight week.
The wholesale cost of oil has declined 30 percent since June, AAA says. The biggest reason is that the United States has pumped up home-grown oil production to its highest level in three decades.
America has surpassed Saudi Arabia and Russia as the world's largest oil producer. We've seen a 34 percent reduction on our reliance on imported crude.
And that means even if the oil producing titans of the Middle East known as OPEC wanted to slow down their spigots in order to boost prices—which, apparently, they do not—we'd still have a fairly stable gas market.
“OPEC states are trying to maintain production levels instead of being sensitive to price at this point,” Jeffrey Spring, corporate communications manager at AAA, told us today.
One key behind our oil producing success, and that cheaper and cheaper gas you're putting in your ride, is the explosion in new crude found in the Bakken Shale region of Eastern Montana and Western North Dakota.
And that stuff doesn't come up with a traditional oil-drilling rig. Sorry to break it to you, but that stuff is all about the fracking.
To be fair, Texas has done its part to pitch in with traditionally drilled oil. But much of our increase in production can be blamed on Bakken fracking.
“We have more access to oil produced in the U.S., in Texas and in the Bakken reserve,” said Spring of AAA. “There's an increase in production here in the United States.”
He also blamed the deflation of China's runaway economic growth, which has helped reduce demand for oil in Asia. Less demand means lower prices.
And, in Southern California, we have the added benefit of the annual switch from costlier summer-blend gas to cheaper-to-produce winter blend, a changeover that must be completed by Saturday, Spring said.
Stations are already stocking up, and that probably accounts for the even steeper slide in prices we've seen in recent days, he said.
There's no bottom in sight, either.
“Unless there's some refinery issue that causes a problem, it seems like prices are going to stay low for the rest of this year,” Spring said.
So, regardless of whether you love or hate fracking, you'll probably benefit from it until at least 2015 arrives.
[Added at 3:20 p.m.]: Bob van der Valk, managing editor of the Bakken Oil Business Journal, says the Bakken Shale region produces about 5 percent of the oil—or 1.2 million barrels a day—that Americans use.
“That's from almost nowhere five years ago to being a significant percentage,” he told us.
And he said that more and more of the oil sourced in Texas, the the country's largest producer, and in neighboring Oklahoma, is obtained through fracking.
“Hydraulic fracturing has been very rampant in Oklahoma and Texas,” Van der Valk said.