Is it over yet? Oil prices drop like a rock
There's been a lot of head-scratching about the exact cause of the meteoric rise in price for a barrel of oil. Are speculators driving it to turn a quick buck? Is it the weakening value of the U.S. dollar? How about increaded worldwide demand? Chances are, all those forces are playing a part in the rise of fuel prices, and no single solution is likely to fix the problem.
Just as it was starting to look like prices would rise on a daily basis for the rest of eternity, the price of a barrel of oil dropped by $16 from Tuesday to Thursday. Economists point to the dismal economic and inflation news as a main factor for the drop. All we know is that ever since gas got more expensive, everything else started to follow suit. That leads us to spend less on things that we don't absolutely need, which probably isn't good for the economy.
With news of the large drop in the price of a barrel of crude, Wall Street got all excited and responded with a couple days of very positive gains in the stock market. Good news, right? Well, oil jumped by over $2 on Friday morning alone, so we'll have to see. Is the $4 per gallon nightmare almost over? Probably not, but we can hope.
[Source: Yahoo, Photo: Getty/Justin Sullivan]
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Reader Comments (Page 1 of 5)
paul34 1:11PM (7/19/2008)
Well, it is kind of inevitable and the whole reason oil producers are scared and trying to appease speculators, and all the other reasons oil is so high.
Keep raising prices, and demand will decrease. It's pretty much just basic economic law.
And indeed, people are not spending money on other things. Refer to: auto sales of EVERY maker in the US, Starbucks closings, etc.
And yea, people like Starbucks are going to be hit the hardest - although Starbucks addicts love their coffee (or iced coffee, or whatever other delicious things SB comes up with), it is definitely not a necessity and will be one of the first things to go when it costs these people almost as much to actually drive to work and feed themselves as they actually make from that job.
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ale 2:02PM (7/19/2008)
"And indeed, people are not spending money on other things. Refer to: auto sales of EVERY maker in the US, Starbucks closings, etc."
Um, well Honda seems to be doing something right, they're sales are up 2%, maybe if US automakers would get their head out of whatever and get their head straight, they probably would not be suffering as bad. Same to that to Toyota as well, they ain't got a clue either what to do, case in point: the new Corolla gets worse mileage than the old one: right on guys! other than the Prius and the Cam, they're just as bad.
pmiddle5 3:34PM (7/19/2008)
"Keep raising prices, and demand will decrease. It's pretty much just basic economic law"
Well idk where you learned your economics but thats quite the opposite.
There is this thing called a supply and demand curve and you just described it backwards
pmiddle5 3:37PM (7/19/2008)
well i just realized Iam on drugs of some sort apparently.
paul34 3:38PM (7/19/2008)
Haha, no troubles pmiddle - when you mentioned it I misread my own comment too and was about to go "d'oh" too =D
Shadyman 5:02PM (7/19/2008)
"Keep raising prices, and demand will decrease. It's pretty much just basic economic law"
True, but there is also such thing as a fixed demand curve, which is also pretty much just basic economic law... Where the price changes but demand stays pretty much the same.
(Keep in mind, there's a fixed price curve too, but that's hardly the case with gasoline)
Blake 5:58PM (7/19/2008)
@ale:
Dude, please. I'm one of the last people to stick up for Toyota, and I somewhat agree with you as far as US automakers. But to use the sales figures of one single company, Honda, to say that the economy hasn't had any negative effect on overall car sales is just ridiculous. What about Nissan? What about Porsche? And while you mention Honda, what about Acura? People like you kill
brains cells of people like me.
Kotse 8:25PM (7/19/2008)
Why oil prices are falling?
It's the Elections!!! Hello!!
The "powers that be" needs to start kissing our arses and pander to the American Public...
Torrent 1:16PM (7/19/2008)
My local gas prices were going higher than the sky everyday, then they stopped, then they slowly went down penny by penny. It's almost a miracle.
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obie 12:39PM (7/21/2008)
yeah i was thinking the same thing..two weeks ago i was paying 4.30 per gallon out here in vegas, yesterday i paid 4.09...its sad how happy that made me.
John Cressy 1:18PM (7/19/2008)
This is probably temporary. With the Chinese shutting down almost everything for the Olympics it will create a temporary glut. Also with all this talk about opening up the US to off-shore drilling and alternate means of energy production it has some small investors running scared. However, Hugo Chavez wants oil at $300 a barrel to finance his Socialist/Communist movement in South America so I would keep on pressing for Domestic independence on all energy ideas. I'm down to using less than $100 a month on gas. Now I have to work on reducing the 1200 gallons of heating oil I will need this winter.
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tankd0g 1:28PM (7/19/2008)
I think I have enough oil bills form last year that I can just burn those for heat.
why not the LS2LS7? 2:05PM (7/19/2008)
The markets don't respond as rapidly to demand as you might think. The Chinese shutting down for a month isn't going to make much of a difference. There has been a huge oversupply of oil and gas for the first half of this year and it took until now for that to even begin to affect oil prices.
ghosthunter 2:46PM (7/19/2008)
love how uninformed you guys are.
China as a NATION used less fuel than California as a STATE in year 2007 (and maybe 2008). yet you guys keep thinking China is the reason for gas to rise from 2 dollar to 4.
fox news is very misleading, get some facts please.
why not the LS2LS7? 3:32PM (7/19/2008)
ghosthunter:
When you have a near match of supply and demand, even a tiny increase can tip the balance from surplus to shortages.
Just because China didn't use as much gas as California doesn't mean China (and other growing countries) don't contribute.
CH 3:40PM (7/19/2008)
Ghosthunter,
The entire West Coast area** consumed 3.2 million barrels/day of petroleum in 2006, while China consumed 7.2. US consumption is flat, while China's is increasing - e.g., 7.6 million barrels/day in 2007.
** Alaska, Arizona, California, Hawaii, Nevada, Oregon, Washington
Torrent 5:28PM (7/19/2008)
Yes. Thanks for giving us hope that the fuel prices will soon rise again.............................
axiom 7:23PM (7/19/2008)
Yeah. Oil prices are high because of Chavez. You must:
1. Be a republikkkan
2. Be a complete idiot
3. Poop aborted brain cells
Its oil speculators, and the reason prices started falling fast is because at the end of last week the Democrats said they were going to introduce legislation to curb SPECULATION TRADING in the oil markets. This speculators were running scared at the start of this week, but by the end of the week it wasn't looking like the legislation was going to come up soon so the speculators got back to doing their thing - artificially inflating oil prices. If and when anti-speculation legislation comes up, oil prices will fall significantly.
richbum 2:38AM (7/20/2008)
@ghosthunter: as a car exporter, I export about 5 cars every week to china. do you think china still rides horses in tiny villages or what?
hamilton 8:26PM (7/20/2008)
@ Axiom
It's true oil prices aren't high because of Chavez (he was one factor at one time but not so much anymore) but you can't say oil is high because of speculators. Speculators don't actually buy crude, they're buying options that predict where the price will be in a certain amount of time. They're basically playing with odds, not with actual crude. A global commodity like oil doesn't care if you're republican or democrat dude.
Here's an article that could help explain what speculation is all about for you:
http://www.economist.com/opinion/displaystory.cfm?story_id=11670357&CFID=13888426&CFTOKEN=19218420