It seems like yesterday when oil was off the charts and yet now, it seems to be plummetting ever farther down. December 2, oil prices fell down below 47$ and now, the OPEC (Organisation of the Petroleum Exporting Countries ) is struggling to accomadate this fall and they may have to cut output for another year and may not even hit the bottom until 2010.
Overall though, it does not seems so bad that oil prices are falling especially considering many oil rich areas (Saudi Arabia, Russia) are not the nicest countries and it would make them less powerful politically with the lessened need for oil. Furthermore, it is a sign that people are resorting to public tranport and bikes to get where they need to go so that is good environmentally and makes people healthier too. I suppose this decrease in oil is in a way a silver lining to an otherwise horrible recession.
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Let me just say, I am NOT complaining about the prices of oil going down. I just paid $20 for a full tank about 30 minutes ago, and that is heaven compared to what it was. The only potential problem I see with the declining oil prices though is that the lowering prices may encourage more people to switch back to driving rather than public transportation, which is definitely NOT what we need right now. If more people take advantage of the cheap gas and more people switch back to using cars rather than bikes and buses, there will be a larger demand for oil, and prices are bound to go up again. Hopefully people can continue to use public transportation and refrain from going oil-crazy, so we can keep the prices low.
I completely disagree (respectfully) with your last paragraph.
I guess my biggest problem right now is this misconception that somehow because oil prices are falling that has something to do with people using less oil, or there is less demand for oil.
That however, is entirely false. EVERYTHING we do in America, every business, every industry, every person is dependent on oil in ONE FORM OR ANOTHER. The market on oil, particularly in America fluctuates often because of speculation, not only on OPEC's part, but also on the buyers within oil companies and oil refineries, and it is also very defendant on the rate of refinery processing. So this myth that the amount of time you spend in your car will determine the price of gas is really very untrue.
I wont try to say I know exactly why the price of gas is falling so low, my best guess is that speculation went through the roof the past year or so, and now people are realizing that financially that may not have been such a good idea, with a failing economy, putting stress on their major clients such as the airlines and shipping industries might cause them to destroy a fundamental part of their industry. So, following a year of record profits, giving a minor concession to oil consumers, in the long run, is a great way of preserving the industry.
On the other hand, I may be completely wrong.
I'm not exactly sure that people are driving less nowadays. I had to do an article for the Outlook on the economy two issues ago, and most people I interviewed said they drive about the same as before...it just costs less. Also, I think the current prices are too good to be true. They'll eventually go back up unless we miraculously switch to a new energy source (which probably won't happen for a while because we're not even close to finding something that rivals oil)
The demand for oil has definitely gone down and as I still am puzzled for why the shell station on elcamino continues to have a hight price of two dollars and something cents it is amazing being able to drive your car without dreading having to fill it up again. I am certain people are not driving as much I even heard on the radio a couple of days ago that even though prices are going down and are staying down people are still switching to hybrids and public transportation because they want it to stay down and I think people are becoming smarter about this and actually caring more which is one step closer to solving other problems especially in the environment.
I don't think that the demand for oil has lowered. We still heavily depend on it for transportation. I think that people just suck it up and pay more. I don't think that the high gas prices turned that many people off. I would have loved it to. I would've been great if people started walking more, or relying on public transportation, or even buying more energy efficient cars, but we are all quite attached to our cars. They are much more convinient, and the public transportation is not that reliable (it sucks compared to many countries).
The drop in gas prices the "silver lining" to a grave issue. I want to say it's good, but it's really not. Once the economy gets better, I'm sure we can expect a rise in oil prices.
So here is the thing. You won't find me complaining about the drop in gas prices. However I will express concern about the speed at which gas prices fell. We we're all frightened by how quickly they went up and now they're going down even faster. I have heard no explanation as to why gas prices are falling, and with the economy the way it is, any dramatic changes in prices starts to make me very nervous.
this past weekend i saw that gas prices that were ridiculously low : 1.29-1.69 a gallon?!?!
my initial reaction was fear. what is happening?! since WHEN did gas prices get SO low! it seems like yesterday that they were nearing 5 dollars and everyone was being so extremely frugal about transportation. it just scares me that gas prices are so low 'cuz obviously it is a red flag that there is obviously something wrong with the economy, not just in the US but globally. ( clearly everyone already knows this )
secondly: everyone will be using gas and forgetting about the pollution. everyone had been so deprived of gas before that the whole Going Green mindset is thrown out the window.
finally, just like gas prices, all prices have been going down. walk through the malls, endless sale signs. we need to up prices to keep the economy going again, not bringing all the prices down!!
Bringing prices down is good for the consumer. It's also good for the people who have saved money. Prices dropping is a good thing.
gas prices drop because the economy drops. people have less money means people spend less money. people arnt going to be encouraged to drive more because they have less money. in fact, higher gas prices means that the economy is booming and people can afford gas. the federal reserve lent out too much money and the rest of the world realized that the profit they obtained would be owed back in debt. therefore people cut back and save money and the economy goes down. it happens, gas prices fall with all other prices in this country, its just easiest to see because they have huge price signs on the side of the roads.
of course gas prices were going to plummet, the economy cant boom forever.
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