Earlier this year, the media trotted out story after story of high gas price hardship as oil climbed to a record-high $147 a barrel back in July. One analyst even predicted in May that oil would reach $300 a barrel.
But, now that a financial mess has struck the markets, oil has fallen from $140 to right around $90 a barrel on Oct. 7. During months leading up to its peak, many were forecasting oil in excess of $200 by the end of 2008 and even $300 within five years. But the economic slowdown has caused the rally in commodity markets to cease, as Equidex President Phillip Gotthelf pointed out on Bloomberg TV on Oct. 7.
"I think that the commodities really outlived their useful rallies because they've exceeded the elasticity of the consumer," Gotthelf said. "Commodities are consumables, they're not investments. They're speculative equals sometimes, but they're certainly not investments."
According to Gotthelf, those commodities include oil, which is poised to go to $40 a barrel or lower in the wake of the global economic turmoil.
"I'm somewhat amused. Goldman Sachs (NYSE:GS) was forecasting $200 a barrel for oil," Gotthelf said. "I see that their forecasts are getting more and more conservative. I said $200 a barrel was ridiculous. Even $150 I thought was ridiculous. We were looking at $24 a barrel in 2004. Everybody is now making comparisons in the financial sector to the implosion of stocks in 2002, 2003 - the last stock recession. Why shouldn't we see oil return to $40, even below $40 a barrel?"
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Question is
October 7, 2008 - 16:34 ET by AndyRWill cheap gas equal cheap food? If we are still producing ethanol and consuming huge amounts of corn, will food prices continue to rise?
yep....
October 7, 2008 - 16:51 ET by BadassBuckeyebecause now the Dumbocrats will force even more Ethonal to be produced to keep up with the cheaper gas.
Everytime I feel that I am getting ahead in the world I look down and see this ball and chain attached to my leg. On it is says US Government...with each link being taxes and regulations. The worst part Obama is flashing smaller links but he fails to tell people they are made of lead...rather than the aluminum they are made from now.
I totally agree with
October 7, 2008 - 16:48 ET by bigtimerI totally agree with Gotthelf...what I fear though is people will soon forget the need to be self-dependent here again and drill baby drill...
People always seem to forget, with the help of the msm and the politicians with the environs pushing behind them with their commercials and lobbying $$$...
Look how soon they ended the patriotic defense of this country after 9-11...same thing.
Energy drives all...and I am talking mainly OIL.
"America isn't the problem...America is the solution." ~ Rush Limbaugh
No! $40 a barrel for Oil is BAAAAAD!
October 7, 2008 - 16:50 ET by c5thenThat means that wind and ethanol and hydrogen and solar can't compete on a level playing field. They will require government subsidies so that consumers will think they are the same price and be able to be tricked into switching and converting.Absent that, no one will be able to afford electricity produced by wind or solar. Ethanol and CNG will be more expensive than gasoline by 50%.
I see oil going back the
October 7, 2008 - 16:53 ET by WhichWingI see oil going back the other way, along with commodities. Inflation will become a bigger and bigger problem, which probably has more to do with the price of oil than anything else (because it is dollar-denominated).
NewsBusters should do a post highlighting all the talking heads and members of the gov't that have told us the economy was just fine for the last year, and that we were not in a recession. (The only way we haven't 'technically' been in a recession is through the manipulation of the CPI, and specifically, the rate of inflation.)
"The power of accurate observation is commonly called cynicism by those who have not got it." - George Bernard Shaw
i disagree a tad...
October 7, 2008 - 17:36 ET by BadassBuckeyeactually alot here.
Inflation is manufactured. Its hard to inflate our economy when the dollar is on the rise and theh world economy on the fall. This "crisis" is the best thing to happen.
1. It exposed the bad policies put in place by Carter and reinvigorated by Clinton.....even though it was prewarned by both Bush and McCain...but don't let facts get in the way.
2. It is causing prices to fall.
3. And those of us who made smart choices are doing just fine.
Gas Prices
October 7, 2008 - 17:25 ET by NoMoreClintons$2.99/gal for regular today in Wildwood, NJ. Good to see that 2 back.
By $2.50/gallon approx.
October 7, 2008 - 20:09 ET by dscottBy $2.50/gallon approx. $70/barrel the economy will restart thus saving the country. Congress's incompetence will be mitigated. It was all a pagent folks, the entire smoke and mirrors emergency spending bill was just to go through the motions.
Nancy Pelosi and Harry Reid, starving the poor one gallon of ethanol at a time. Fill your tank with E85 and cull a village.
I'm on the case!
October 7, 2008 - 21:12 ET by AmericanEnergistI blog about energy and politics every day. Pro-bullish oil forecasters never admit full disclosure. Except for its customers, who believes Goldman Sachs these days?
Read my post today as I examine the 'spread' between crude vs. gasoline prices:
http://www.armchaire...
The 'kitchen sink' approach will keep prices down; it is up to the energy tech sector to haul-a$$ and work towards the successor to petroleum when the time comes.
www.ArmchairEnergist...