Some Good News - Oil Falls to Below $65 a Barrel

There's a lot of bad news out there but there are also some positive things happening. A story that has gotten somewhat lost in the credit and banking crisis is the fact that the price of oil has collapsed. It was trading as high as $140/barrel last summer and today finished below $65/barrel.

There's a lot of bad news out there but there are also some positive things happening.  A story that has gotten somewhat lost in the credit and banking crisis is the fact that the price of oil has collapsed.  Oil was trading as high as $140/barrel last summer when I thought it might come down.  Back then, I estimated it might fall to below $100.  Today a barrel of oil finished below $65.

US Regular Gasoline PricesThis has had a positive impact on gas prices.  I was able to find gas selling for $2.50/ gallon the other day.  Nationally, the price of a gallon of gas dropped 27% in the last week to $2.70 per gallon according to the Energey Information Administration (The official stat energy stat bureau for the US government).    I also expect that my heating oil bill will be coming down.

All of this is good news amidst the continued declines in the market.  High energy prices are a tax on everyone.  Low energy prices will be one factor in getting the economy rolling again.

But, hopefully the drop in oil prices will not discourage nuclear and renewable fuel initiatives.  Low prices will not last forever.  Once global growth picks up, as it inevitably will one day, energy prices will shoot back up.  Hopefully, we'll all use this breathing space to invest in the technologies and energy sources that will wean us from a dependance on fossil fuels.

 

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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Comments

  • Lev

    October 25, 2008

    The problem here is precisely the one that you cite in your last sentence. Lower energy costs make development of alternatives less interesting for investors and this mess is likely to return again.

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