Double Good News
So OPEC is making a deep cut in production, but oil prices keep dropping. Let's hope the trend of us paying less and OPEC getting less continues for a long time.
Meanwhile, Huge Chavez figures a fair price for oil would be between $70 and $90, twice today's cost. Chavez better watch it, since the last thing he wants is the world to be fair.
posted by LAGuy @ 12:09 AM
2 Comments:
Part of why its going down is the reduction in usage that resulted from the shock of $4 gallon gas last year. That coupled with a global economic crisis (maybe someday economists can tell us if the price shock helped precipitate the crisis- hard to say- fuel prices were going down by the time of the crash in September but the earlier high prices had helped kill the SUV market for a time and we see where the automakers are today. Other fuel shocks (1973, 1979-80) produced bad economic conditions but not as bad as this one (so they say at least). Of course there are many contributing factors to current problem.
The rise in oil prices was unwarranted by the fundamental conditions of the economy and supply and demand issues. Now the drop (below $40 a barrl)is likewise unwarranted. Commodities markets, moreso than securities markets, seem to be very susceptible to "peer pressure" and rumors and panic.
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