Sunshine splashed with clouds this Monday afternoon on California’s north coast — only rain so far was early this morning, but more is expected before this particular front calls it quits.

One of the big news items as of right now has been going on for nearly six months — the insane drop in oil prices, which in turn has led to the lowest US gas-pump numbers in a long, long while.
Earlier today, I put another $20 worth of gas in my old Jeep Comanche at $3.27 a gallon for regular — the Union 76 station here in town. About 10 miles south, in Eureka, the price for a gallon of regular is two cents cheaper — do not understand why, though.

(Illustration: An oil pump ‘horse,’ found here).

Meanwhile, two/three hours south in mid-Mendocino County, price of a gallon of regular is a quarter cheaper — further south, down in the Bay Area, that same gallon is now under the $3 mark, in fact, $2.79 in Mill Valley. And from what I can gather, how the fuel is delivered, and how far, greatly influences the price — among other nasty ingredients.
A way-good nutshell of the system can be found at our own The North Coast Journal from a couple of years ago, then that self-same gallon stood at $3.99 a pop.
Key points, maybe:

Consider this: Almost all gasoline sold in Humboldt and Del Norte counties comes from the big, paint-flaking, Chevron-owned terminal that sits behind the Bayshore Mall in Eureka.
The fuel has been converted from crude at Bay Area refineries and then shipped up here in tankers or barges.
From the terminal it gets hauled in tanker trucks to nearby stations and ones as far away as Crescent City and the tiny riverside town of Hiouchi on twisty Highway 199.
You might expect prices to be higher the farther you get from the terminal, but that’s often not the case.
…
On the retail level, station owners seem to have opted out of competition entirely, partly out of deference to the “big fish” but mostly because there are only scraps to be had this far down on the food chain.
Cohelan points out that oil companies realized years ago that there’s no longer much money to be made at the retail level, and so they’ve been systematically divesting of gas station ownership.
“The refiners now know that the big money is in the wholesale price, and you leave a couple of bucks on the table for the poor dealer who’s selling Twinkies or a car wash,” he said.

And that wholesale price is looking way-down yonder — an oil war, perhaps?
In such a heavy, heavy mechanical world, a sort of greasy-slimy butterfly effect over mostly desert lands becomes fairly obvious — and there’s some supposedly controlled chaos, too. Oil floats in price. The controlled-chaos bit was the move last week by Saudi Arabia, via OPEC, to continue producing, despite the greasy backlog — a move that further crazed the waters, and was really a nasty slap on the ass.
So, Monday’s market suffered a whiplash, U.S. oil prices posted its biggest one-day gain in two years — a small smile in amongst the tears, just a brief nudge on a slide south.
From the Wall Street Journal this afternoon:

Many investors and analysts believe with OPEC on the sidelines it will take cutbacks by companies in the U.S. and Canada to bring supply and demand in line and pull the market out of its swoon.
That day may not come until deep into 2015 or beyond, some analysts say.
“The era of $100 [a barrel] oil is over,” Citigroup said in a note.
“Oil prices appear to be falling rapidly to — if they haven’t already reached — production costs.”
On Monday, light, sweet oil for January delivery shot up 4.3 percent to $69.00 a barrel from Friday’s close, recovering from a more-than five-year low below $64 a barrel hit in overnight trading.
It was the biggest one-day percentage gain for the U.S. benchmark since August 2012.
Brent futures, the international benchmark, gained 3.4 percent to end at $72.54 a barrel.

Just in June, the above ‘sweet oil’ or West Texas Intermediate (WTI) was floating at about $106 a barrel. In this mechanical world, this oil business has impact.
Environmental writer Chris Mooney had a good explanation this morning via the Wonkblog at the Washington Post:

But what’s driving this slump — which is quickly becoming the single most important economic story of 2014 (and maybe 2015)?
There’s one short-term reason and three longer-term reasons.
…
The (OPEC) meeting was the most important in years, because it came amid a pre-existing slump in prices.
Everybody wanted to know if OPEC would take any action to halt the decline.
It didn’t — presumably because its members decided it was wiser to weather the current storm — and crude oil prices immediately tanked.
…
The United States, most of all, has seen a major growth in oil production, thanks to the shale oil revolution, in which new technologies like horizontal drilling have allowed access to hydrocarbons deep beneath the Earth’s surface.
The figures from the Energy Information Administration are truly dramatic: Almost twice as many barrels a day of crude oil are being produced now in the U.S….
Production of oil has also been up in many other countries.
…
So in sum, it would seem that the trend in oil prices is  due to that most basic of economic factors: Supply and demand.
So what happens next?
Does the slump continue, or is it possible we’ve already overshot and are due for a reversal in oil prices?
We can’t be sure, but there are some reasons to think a bounceback could be possible, especially if there’s a European economic recovery.
And in the long term, overall fuel consumption is definitely projected to increase, not decline, out towards 2040 — driven largely by demand in developing nations.

And along with more cars on the road, more environmental damage — the greasy butterfly flies not far.