7-8-08 by dugan
Having trashed the world’s major stock markets with $145-a-barrel crude oil, the oil market now is getting dinged because oil is too expensive for the world’s weakening economies to stomach. Here’s the quote that gets the obviousness award (from AFP news service):
Crude prices fell heavily [to $136 a barrel] "amid concerns over the general health of
global economies following a sharp sell off in equities," said Sucden
analyst Nimit Khamar. "Many economies face a bleak economic outlook which could reduce the demand for oil, especially at current prices."
All the more reason to keep the heat on Congress.
At $136, oil is still more expensive than at any time in history before late June. I hope it’s due for a much bigger fall, which could help economies staggering under the cost of gasoline, diesel fuel, heating oil, jet fuel, even asphalt. But if it does keep falling (remember $100 oil?), Congress shouldn’t heave a sigh of relief and brush off several bills adding regulation to energy markets or boosting renewable energy. World economies shouldn’t be subject to the whims of investors whose actions can’t even be observed, much less controlled.
I just love the analyst comments on oil prices. Today the price dropped on fear that demand for oil will drop as economies sink. And what is it that’s sinking the economies? Largely oil prices, right? In a world of logic and awake government, that would be foreseen and forestalled.
A month ago oil rose because the drop in consumption in the U.S. and Europe wasn’t big enough to offset China and India. A few days ago it was up because Iran was saying snotty things to the rest of the world. It’s been a long time since oil prices were affected by what’s happening in the here and now–2005, to be exact, when Hurricane Katrina hit the Gulf of Mexico. And even then, prices rose far beyond actual damage to offshore rigs and onshore refineries.
When a market is so broken, it won’t ever fix itself.