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Oil Just Keeps Dropping!
By JLP | December 4, 2008
Oil dropped another $3.12 to $43.67…the lowest level since January 2005.
If someone would have told me back in July that oil was going to be trading in the 40s by the end of the year, I wouldn’t have believed them. It’s simply amazing how quickly things can turn.
Of course the bad side to all this is that now there’s less incentive for finding alternative fuels. I guess all those plans will get put on the back burner until it makes financial sense to go for them.
Topics: Oil |
December 4th, 2008 at 4:34 pm
May I ask why it’s dropping? (in layman terms hopefully)
December 4th, 2008 at 5:58 pm
@Eric: because oil was being artificially inflated creating a huge oil bubble. There was absolutely nothing fundamentally that changed with consumption to justify the high spike, and you will see the same thing with gold. the plunge in oil now is because of global economic slowdown and because there is a lot of global pressure (e.g. in the US) towards alternative fuels/energy and better fuel economy, but principally it’s because of the weakening global economy. when china is having to provide a bailout stimulus package, and it is the fastest growing oil consumption economy, that makes people very nervous about oil consumption, too.
December 4th, 2008 at 7:01 pm
@Eric: Deflation. The US economy is in a period of deflation and the price of oil is based on the US dollar.
As far as prices dropping, we’ve seen pennies at the pump recently. 2-3 weeks ago when it dropped, prices dropped at the pump around the same time. Oil has dropped about $12/barrel in the past 7 or so days yet hardly a change at the pump. And, yes, I know this is futures for January, but that hasn’t stopped prices from previously dropping when futures for the next month dropped.
December 4th, 2008 at 7:11 pm
Unfortunately, this is what the oil companies do.. they inflate the prices until people refuse to pay and start to look towards alternative fuels.
Then they lower the prices so people forget about renewable energy.. and right when people are depending on oil again, they hike up the prices.
Renewable energy and alternative fuels is the only way to go.
December 4th, 2008 at 8:11 pm
I have 2 different neighbors/friends who traded in BOTH cars to obtain NEW ones that had marginally higher mpg. I don’t think the lower gas price is consoling them when they pay BOTH car payments.
Moral of the story: knee-jerk reactions ususally don’t pay…
December 4th, 2008 at 10:54 pm
Have no fear…Obama will fix that. We’ll be back at $4/gallon in no time.
“Of course the bad side to all this is that now there’s less incentive for finding alternative fuels. I guess all those plans will get put on the back burner until it makes financial sense to go for them.”
December 5th, 2008 at 8:01 am
Tyler
you have no idea what you’re talking about.
December 5th, 2008 at 8:05 am
Tyler, you have a lot to learn, young one.
December 5th, 2008 at 9:13 am
Why? I think that Tyler is right…
December 5th, 2008 at 9:52 am
I don’t think Americans are that short-sighted. People are still short on cash and are learning a lot of hard answers right now - one of which is that oil fluctuates and it can/will go back up again. There is too much research coming to light about our Earth’s resources and how long they might last. People who were never “greenies” are waking up to see that our environmental issues are really political issues - and oil is the perfect example of that. Americans are starting to see that using large amounts of oil w/o a plan to reduce that is un-American and will only hurt our country in the long run. I know when I’m using oil I’m padding the treasuries of the Saudi, Russian, Turkish governments and not my own US treasury.
December 5th, 2008 at 10:45 am
Tyler,
Is this really how you believe the system works?
I think you’re wrong.
I think hedge funds and speculators drove the price into the stratosphere. Oil companies pump the stuff out of the ground but they don’t set the prices…traders do that.
December 5th, 2008 at 11:17 am
with the price of oil dropping to an all time low adjusted for inflation, this is good news for consumers. however, we must not abandon our effort to develop green energy and electric vehicles.
going back to big suv and humongous truck will be a big mistake.
american need to learn from the lessons of the past.
December 5th, 2008 at 2:00 pm
It’s crazy how low oil has gone. I know the reasons aren’t for good reasons, but I am not complaining about how much less it is costing me to fill up a tank of gas. I can’t imagine anyone else is either.
Craig
http://www.budgetpulse.com
December 5th, 2008 at 3:44 pm
Brilliant really of OPEC. We’re finally talking about alternative fuels and the price of fuel plummets making those alternative fuel plans less seductive.
December 6th, 2008 at 8:41 am
I wish I had the smarts to short oil from $140 to its present value. I did short oil back in June and make money but I wish I had held on to those Contra Etf’s.
December 7th, 2008 at 12:33 pm
I think it’s a great thing that the oil prices are coming down again especially as prior to september they were sky high. The only thing that bugs me is that gas companies are quick to put oil prices up but slow to let them down again, long may the downward fall continue!
December 9th, 2008 at 6:22 am
OPEC mafia playing games again.