Today’s Headlines

  • RedEye Provides a Summary of Upcoming Transit Projects
  • Man Killed in Single-Car Crash on Kennedy Near Fullerton (Sun-Times)
  • Former Uber Driver Charged With Sexually Assaulting a Customer (Tribune)
  • Family of Siblings Killed in August Train Crash Suing Metra, BNSF (Tribune)
  • Locally Trained Designer Returning to Chicago to Create Artwork for Wilson Stop (Sun-Times)
  • MPC Looks Back at Its 80th Year of “Reinventing the Region”
  • Why Have Local Gas Prices Dropped More Than $1 a Gallon Over the Past Year? (Tribune)
  • The Solstice Is Behind Us, But Bike Lights Are Still Essential for Winter Riding (Keating)
  • In Praise of the CTA Holiday Bus (Tattler)

National headlines will return next year.

  • duppie

    Tracy Schwartz seems very CTA focused. Nothing about the Metra which has some neat stuff going on, especially on the UP-N: Opening of the outbound station @Ravenswood,start of phase 2 of the track and bridge replacement, and start of construction of a new station @ Peterson.

  • BlueFairlane

    That Tribune article only hints at why gas prices are where they are right now. The issue is we’re in the middle of a production boom that has inspired a price war. Thanks largely to the last decade’s fracking innovations and the resulting boom in places like North Dakota, U.S. production is at levels not seen since 1986. This has created a world-wide supply glut.

    Now, you might think the smart thing for producers to do would be to cut production, but there are a couple of reasons this won’t happen in the short term. One, most of the U.S. frackers are small-time, independent operators who can’t really afford to cut production. Two, OPEC–mostly Saudi Arabia–is hoping to price the frackers out of business. They’re still pumping the traditional light crude, so their margins are far lower than what the North Dakotans need. Saudi producers can make a profit with oil around $30 per barrel, while the North Dakotans need it to stay around $50. (There’s actually a wide range in what the frackers need. Some need prices as high as $90. $50 is an estimated average.) The Saudis are just waiting for the bottom to fall out as the North Dakotans go under. Don’t expect anything to change until that happens. My guess it will be at least a year, and will more likely work itself out right around the 2016 elections.

  • Louis Silverman

    She’s targeting her reporting to her readership. I see people on the CTA reading the Red Eye every day, but never see anyone on the Metra reading it.

  • urbanleftbehind

    The reverse commuters read it, as evidenced by the multiple discarded copies lying on seats on the 5:35am Chicago to Waukegan when it gets turnaround for the 7:09am run back to the City.

  • Anne A

    I see people on the Rock Island reading it every day.

  • ohsweetnothing

    So, your explanation has been out there for at least a week or two now (at least I’ve been aware of this explanation for a week or two…so maybe it’s been around longer). Why wouldn’t the Tribune at least allude to this in some way, shape or form?? Maybe I’m missing something, but it’s just one more reason that I hate that paper…

  • BlueFairlane

    It’s worse than you think. I’ve found rumblings of this scenario discussed in trade publications and a few mainstream business magazines as far back as July. The Tribune doesn’t mention it, though, for the same reason they never delve beneath the surface of anything complicated. They don’t have the slightest idea this is even a thing. That’s looking just a bit too deep for them, and they think it would just confuse their readers, anyway.

    They can give you an in-depth examination of just how many tears Virginia McCaskey cried yesterday, though.

  • The Red Eye has been CTA-focused since it started. Its website is divided into pretty strict sections, and the one about transportation is actually called “CTA” but they also lump Divvy stories into that section.

    Is Metra doing anything else?

    The UP-North line is one of their best and it’s freight train-free, making change a bit easier to occur.

  • What are the next events for gas prices? Will they rise as fast (or as slow) as they fell?

  • tracyswartz

    It’s definitely a CTA column and not a public transit column, as envisioned by the creators of RedEye more than a decade ago. Occasionally I mention Metra news (the first bullet point about the Ventra app affects Metra riders too) but I keep the column CTA-driven (pun intended) based on editorial vision and requests for coverage I receive from readers.

  • Lisa Curcio

    Wait! What is happening to the Bears is not the most important thing happening in Chicago and the world right now?

    Another part of the theory I have heard, although I don’t have a reliable source, is that everyone has been ganging up on Russia. Also, demand from China will be accelerating in the relatively near future which will push prices up again. If anyone has insight into those thoughts based upon evidence, I would love to hear it.

  • Clark Wellington

    It makes sense given the readership. I’d guess that the vast majority of RedEye readers live in the city of Chicago. And the vast majority of Chicagoans who take public transit use the CTA, not Metra (and I say this as someone who took the ME for a number of years within the city).

  • jeff wegerson

    There are layers and layers here. Likely both the driving out of frackers for the Saudi’s and an attack on Russia for the U.S. are in the mix. In addition to Russia, Venezuela and Iran also have budget dependencies on oil prices.

    Yet another issue is the budding attempt by Russia and China to separate from the dollar as the only world reserve currency. Or more properly the “petro-dollar”.

  • BlueFairlane

    I’ve heard others suggest the U.S. is working with the Saudis in an attempt to destabilize Russia, but I have doubts about that. For one, though I’m a fan of the administration, that’s the type of strategic, chess-like maneuvering they’re not particularly good at. Two, the strategy involves a huge risk to the overall economy without much guaranteed benefit.

  • BlueFairlane

    As with most things of this sort, that depends on who you ask. Some suggest the shift has already started and point to a significant drop in new well permits in North Dakota as proof. (This puts things a little sooner than I’d have thought, but it is a strong sign.) More optimistic economic types say the effect will be minimal, and that any surge in gas prices will be minor. They also have convinced themselves that the frackers have grown a lot more efficient than they have. (I have some friends in real life in the industry who strongly suggest this is silly.)

    I tend to buy the argument that we’ll have a big and sudden bust followed by a sudden drop in U.S. production, and that this combined with panicked speculators will result in a fast run-up in prices back to where they were, say, two years ago. I think come spring, we’ll see the normal slight rise that comes with the seasonal shift in refinery operations, but that things will otherwise be stable for at least six months. At some point after that (it could be this summer, it could be as much as a year later), there will be a sharp climb in price similar to what we saw in 2008-09.

    One of the things I’m keeping an eye on is this chart … I expect you’ll see the shift begin with a drop in employment in this sector …

    http://data.bls.gov/timeseries/SMS38000001000000001?data_tool=XGtable

  • rohmen

    Blue has summarized things well above, but for people interested in a decent write-up as to what factors are believed to be at play, Vox has what I’ve found to be a pretty accessible synopsis both here http://www.vox.com/2014/12/8/7339471/why-gas-prices-low, and here http://www.vox.com/2014/12/16/7401705/oil-prices-falling

  • jeff wegerson

    Your reasons for doubting a strategy to destabilize Russia strike me as reasons why they would go down such a path. Namely since they are not good at it then they likely don’t know that they are not good at it. Some think that Obama kept a lot of the Bush crowd that goes in for just such geo-strategies. The Iraq-war Bush Crowd.

    Whether the U.S. is pursuing a bad strategy or not I think the Russians think they have to assume that the U.S. might be. In that case the easiest way to demonstrate to the Russians that U.S. is not trying to destabilize them is to back-off in the Ukraine. Oh wait, the U.S. is not behind that regime change either…

  • jeff wegerson

    It’s my impression (non-expert) that much of the drilling was and is being done with borrowed money. While it might make sense to stop pumping now and wait for prices to come back up so as to maximize ones profits, one has to pay off the debts now.

    In that case the flow will only slow as existing wells dry up and are not replaced by new ones that would be coming on line but now are not because it’s too hard to get new money for new wells. It’s my impression as well that fracked wells actually have a pretty short life span.

    So those factors would suggest a slower reduction in production rather than a sudden one.

    Then there’s the issue of China filling their reserves. How long can that go on? And if they fill full and China’s economy doesn’t boom back there’s more glut pressure when they stop buying.

    Then more, if the impending battery breakthroughs pop and the electric car market pop, we begin to see even more pressure keeping prices down. Germany is already producing a quarter of its electricity with renewables.

    Hell of a time to be trying to guess oil futures, ehh?

  • duppie

    Thanks for the explanation.