Some Good Economic News…Some Not So Good

Good News: Oil prices have dipped dramatically lately. I have followed energy prices at the futures level since 2002 when I became upset that gas was skyrocketing to the insanely high price of $1.70. These days, $1.70 seems cheap. While I don’t think we will see $1.70 gas again, I do think a price around $1.99 is possible in many areas by December. Some people have said prices are going down because “an election is near.” Nope. It is because our economy is weak and getting weaker, and demand is down in developed countries, like the U.S. Thus businesses are using a lot less fuel, and so are consumers. Part of the price drop is that Americans have finally wised up, and have started conserving energy.

This is an example of why it is important to conserve energy. Using less fuel lowers prices. That is basic capitalism. If you want to lower a price you do one of two things. You either increase supply or reduce demand. Right now, the oil market is well-supplied because there is a lot of supply and weakening demand. It is a shame that it took a near economic collapse to lower oil prices, but there is at least a little good news amidst the doom-and-gloom. I just hope we don’t forget about $4.00/gallon gas, and that we keep conserving, and keep developing alternatives, or we will be back at $4.00 very soon.

Some Friendly Advice: Buy Gas Now

Oil and Gasoline futures shot up big time today (the dollar weakened and speculators jumped back in the market). I have a feeling the local stations will bump up their prices soon, probably tomorrow or possibly not until Monday. I bought gas for 3.43/gallon today for this reason.

I could be wrong, but usually this is a big predictor that a jump is coming.

UPDATE: As of today 8-22-2008, oil has fallen the largest amount for one day since 1991. Wow is the oil market ever volatile. However, oil rose by about the same amount yesterday, when I gave the above advice, so you can understand my warning. For those who are getting $3.43/gallon, I still suggest taking it!