posted on Nov, 24 2008 @ 06:50 PM
A couple of factors are driving this cost down. This is a complex problem and no easy fix.
Summer gasoline have higher priced oxidizers added to help combat pollution. An over supply of summer blend gasoline is now being dumped on the market
just in time for a different winter blend. Demand is also down, so this is the classic supply and demand theory in action. Thus, lower the price even
more.
It will work itself back up a little bit by January or February and then much higher next May.
Now for the question you should have asked and some have answered. It is about the price of oil which is different than the price of gasoline, but
related.
The low cost of oil is bad. it looks great, but is really bad for everyone. You won't see it now, or even in a couple of months. There are several
countries outside the middle east that have huge oil and gas revenue. They owe the international bankers and foreign banks tens to hundreds of
billions of dollars.
Russia is the top of this heap. There is some concern if Russia can survive as a country once all the financial problems fully hit them. This will not
happen for 6 to 12 months from now. Most of Western Europe has a huge banking crisis looming over this issue. America's banking system is in great
shape compared to this problem.
To quickly solve this problem would to be driving the cost of oil back up. BUT, there is now a recession teetering on depression levels in some
countries. The demand for oil will stay below historic levels of usage and prices will be stabilized by cutting production. Once again, a supply and
demand theory in operation. This just produces the same income as there is not as much oil to sell as there is now, but it balances out.
Russia had loans and spending set in place for oil priced at $120 to $140 a barrel. You will not see these prices again for a couple of years. Once
the recession is over, prices will start to climb as usage starts climbing. Now remember the cut back in production we are experiencing now and in the
next couple of months, OPEC will not make the same mistake twice. Expect them to keep production levels low and prices very high.