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The price of crude oil dropped below $100-a-barrel yesterday (its lowest level since February) as the slowing economy -- bringing with it a reduced demand for oil -- raised concerns. Interestingly enough, the drop in crude didn't affect the price of gasoline as it rose 16 cents per gallon due to refinery closures from Hurricane Ike. The storm only caused moderate damage to oil platforms, but more than a dozen Texas and Louisiana refineries were shut down or idled ahead of the storm. It was just July when crude oil prices peaked at just over $145 per barrel, and gas prices neared $5 in many parts of the country. The high cost of fuel over the summer stymied drivers, who cut back on consumption forcing the price of oil to slowly retreat. Analysts who predicted doom ($200-a-barrel by the end of the year) are now scaling back their forecasts, and some have even predicted crude may eventually drop to $70-a-barrel. While we obviously welcome any drop in the price of crude, it's the volatility -- the sharp fluctuations as a result of market conditions -- that we would also like to see addressed.

[Source: New York Times, Photo by ADEK BERRY/AFP/Getty]



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  • 34 Comments
      • 6 Years Ago
      They really use barrels? I mean they put oil in barrels? Not some larger container like the belly of a ship? and then pump it.

      I don't trust my gas station. I say they should put gasoline in cans (small barrels) so that we know when we buy a gallon or 5 gallons of gas, we really get 5 gallons. And no other item is in there, like dirt, water, piss. Plus, throw some in the trunk for emergencies or just extended range/economic purchasing.
        • 6 Years Ago
        I thought the same thing about the barrels after that pic, lol.

        I believe the division of Weights and Measures periodically check gas stations for the pumps being accurate, and i think there is a big fine if they are off by over a certain amount.
      • 6 Years Ago
      March 2008 - crude oil is $98 a barrel. Pump price is $2.75 a gallon.

      September 2008 - crude oil is $98 a barrel. Pump price is $3.77 a gallon.

      Hmmm that's odd. I thought prices were dictated by the world markets.

      Can you say rampant corruption?
        • 6 Years Ago
        TJ,
        how come then when IKE hit the prices of gasoline went up by $0.65 overnight. I thought they purchesed the current gas over two months ago.
        • 6 Years Ago
        Too bad it doesn't go both ways. It doesn't take the pump price two months to go up.
        • 6 Years Ago
        @Todd: Wages and prices are Sticky Downwards.

        With the price dropping so much so fast, it seems more like speculation than ever. Only specs are so pro-cyclical.

        This was an interesting read: http://www.globalresearch.ca/index.php?context=va&aid=8878
        If these guys are even half-right about unregulated trading, it would explain a lot.
        • 6 Years Ago
        $3.77? I want to know where you live. Here in S/E MI it was $4.30 for regular (a few days ago... I've been trapped inside sick for a few days)!!!
      • 6 Years Ago
      from $147 per barrel to $110 was demand destruction. Now, it's about further credit dislocation on ws; lehman bankruptcy, aig toppling, and etc. less than $100 is not as good for the consumer now as would be thought.
      • 6 Years Ago
      What everyone needs to remember is that the price of oil has dropped, in part to us using LESS. Hell, even though I have a brand new car I've started to take the bus to school. It picks me up right in front on my apartment complex and drives to campus on 20 minute intervals. Sure I have to go stand outside in the sun, and the bus isn't always on schedule, but it sure beats looking for parking. Oh, and its free. Just because gas is going down doesn't mean we should just start driving all over kingdom come again. If we do that, gas will go right back up. Keep up the lowered demand and we can keep gas prices manageable while we work out a solution in order to get us off oil.
      • 6 Years Ago
      Why can't we go back the the era where it's commonplace to have an angry mob storm a building [oil company HQ] and have a good old fashioned hanging?
        • 6 Years Ago
        why, because doing business is somehow a capital offense? What about the heads of Lehman, AIG, Fannie/Freddie, WaMu, Morgan Stanley, FED, et. al.? They are screwing their business, and thus the rest of us far worse than the oil companies are. The oil companies are solvent, and working.

        The death penalty is based on the rule of law, due process, and the ideal of justice being done in the name of a deceased victim, and the value of their life taken. Not the value of the criminals life, and a lynch mob is not a court of law.

        lynching should be punishable by the death penalty, not a substitute for it.

        It is far more disturbing to suggest lynching than anything the oil company management might be doing. But I am not going to lynch you for that. Get the point?
      • 6 Years Ago
      So why the hell am I still paying over $4 / gal??!?!?!
      • 6 Years Ago
      The way I see it is that oil at $90 makes expensive exploration in difficult geologies uneconomic. This will force the continuing draw down from established fields, all of which have peaked or are peaking. The result will be, notwithstanding demand destruction, an eventual increase in the price of oil.
      Consequently, I reckon the present fall in headline prices may in fact be a poisoned chalice as it will kill exploration.
        • 6 Years Ago
        Your premise is right, but 90$ a barrel is still pretty high, when most current fields produce at ~55-60$ a barrel.

        Until the price goes THAT far down, and the margins get tight again, exploration will probably continue.

        Tar sands, and coal-to-oil and stuff break even between 45-65$ a barrel. I don't think 90$ is a problem for them.

        And if scarcity is a factor, and established wells are shown to be running dry, demand will force prices up, for the exploration you speak of. The oil companies aren't going to wait to run out before pushing exploration, and forcing the market to flow the other direction, with production actually pushing prices, rather than prices dictating production.
      • 6 Years Ago
      Because ALL of refineries are located in a hurricane zone and Obama and his minnions refuse to allow new ones to be built in less exposed areas.
        • 6 Years Ago
        Uhh, the US has a good portion of its refining capacity on the West and East coasts as well - which are picking up the SLACK since they have some EXCESS capacity (due to the overall drop in the demand for gas in the US, it's unlikely that any new refineries would be built any time soon since most refineries in the US aren't running near full capacity).

        As for the overly high price of oil - about 1/3 of that was nothing but speculation (and had nothing to do w/ the actual market demands).

        The amount of $$ hedge funds and other investment funds threw into oil the past year or so was just outrageous - but now, it's the short-sellers who are winning.

        And who do we have to thank/blame for that?

        John McCain's good friend and (former) financial "guru" Phil Gramm who spearheaded the Commodity Futures Modernization Act of 2000 (and oh, btw, Gramm and his wife also had their fingers all around the whole Enron fiasco as well).

        Btw, I'm a hardcore fiscal conservative - but Gramm and his minions have just about destroyed the American financial system with their over deregulation (which allows for these bubbles and the inevitable implosion).
        • 6 Years Ago
        You're blaming Democrats for high gas prices? huh? I don't get it. Bush hates the environment, and loves oil companies, and has been in office for nearly 8 years. The last new US refinery was built in 1976... have there been any other republican presidents or congresses since then? Your argument is retarded.
        • 6 Years Ago
        You think that oil companies are even asking to build new refineries? They won't build any until someone forces them to.
        • 6 Years Ago
        Wait..what?? I don't think Obama has much control over that. They're obviously in the gulf states because a huge chunk of our oil COMES FROM THE GULF.
      • 6 Years Ago
      Yet gas prices are the same or HIGHER than they were when oil was $147 a barrel. Total BS!!!
      • 6 Years Ago
      How is this surprising?

      1) PAST TRENDING AND SEASONAL FLUCTUATIONS. This is so often overlooked it is laughable.

      2) SPECULATION. This is not what drove it up (see point 1), but this IS what drove it up so high. Speculators have bigger fish to fry at this point. Trust me. My client is Lehman....
      • 6 Years Ago
      Now will this mean that people will buy larger cars and trucks and drive more. That mean consumption goes up and prices go up. It's the oil roller coaster!!!

      Does this mean the small cars will be cheaper and available now?
      • 6 Years Ago
      It's almost like there was a crude oil bubble resulting from over-speculation and emotional hysteria that then burst. In fact, if you chart it, it looks exactly like a bubble.

      Crude is going to $70/barrel or lower.
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