Friday, February 20, 2009

What's Up with Oil Prices?

Can somebody explain this to me?   In today's Washington Post, an article stipulates low oil prices as now contributing to the economic crisis.  Oil prices continue to plummet, the cost of gas is relatively low, yet, for December 2008:
The Federal Highway Administration said it was the 14th consecutive month in which American motorists drove fewer miles. In 2008, U.S. motorists drove 3.6 percent less, or 107.9 billion fewer miles, than in 2007, the FHA said. Total miles driven, which normally rise every year with the population and number of cars on the road, fell slightly below 2004 levels.

The Organization of the Petroleum Exporting Countries has cut production three times since September. It plans to meet again March 15, and senior officials of the cartel said additional cuts in output are likely. But OPEC has been having trouble keeping up with shrinking global demand.

I guess China, with his billions of people and burgeoning middle class presumed to be the economic engine/powerhouse for decades to come,  is consuming less oil because they're making a lot less stuff to export to us (to buy with the money they've lent to us), but what else gives?

1 comment:

Denford said...

Opec have underestimated in the anger in the world at their holding everyone to ransom.

No person, let alone a nation, wants to be a mercy of these foreign oil interests.

So I think what we are seeing is more a reaction from the first group of people sensitised to the fact that the best way to fix Opec is stop using their product.

You will also see more and more people turning to alternative energy.

I personally can not wait for the mass production of cars that not only run as well as gas cars but on electricity.

This development is being frustrated by the oil interests, but they are beginning to lose ground. People are just too angry with Opec.

They think they own us.


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