economics and history suggest that today’s price should be viewed as a probable ceiling for a much lower trading range, which may stretch all the way down toward $20.Apparently we are getting closer to the $20 floor-price!
AAA andThe dollar at the pump seems overly optimistic. But, I get the point--prices will fall some more before refineries are forced to shift to a different mixture in the spring.GasBuddy , two organizations that follow gasoline prices, say that gasoline prices below $2 will not be unusual in most of the United States. As oil prices fall, and refinery capacity stays strong, the price of gas could reach $1 a gallon in some areas, a level last reached in 1999. As a matter of fact, the entire states of Alabama, Arkansas, Missouri, Oklahoma and South Caroline have gas prices that average at or below $1.75.
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The eternal optimists at Reason are, rightfully, dancing with I-told-you-so moves:
In fact, it is very likely that the world is now experiencing the downward sloping side of latest commodity super-cycle. Generally speaking, as each succeeding super-cycle unfolds resource prices eventually reach levels even lower than the nadir of the previous cycle. In any case, depletionist innovation-deniers need to be publicly shamed.And oil prices are dropping because?
Oil is priced in dollars, so a stronger dollar makes oil relatively more expensive for all consumers using currencies other than the dollar. Morgan Stanley says that while the oil glut is responsible for oil prices falling from triple digits down below $60 per barrel, the fall from $55 to around $35 largely comes from the strong performance of the U.S. dollar over the past year.So, what should I tell students about the future price of oil?
Last fall, Goldman Sachs even suggested that the current oil price slump mirrors what happened when oil prices collapsed in the 1980s and remained low throughout the 1990s. In other words, humanity may enjoy low oil prices for perhaps another 15 years.What?
How good are those oil price predictions? We need to keep in mind a quote that Reason offered a year ago:
When contemplating the future of oil prices, one should always keep in mind U.S. foreign service officer James Akins’ observation, “Oil experts, economists, and government officials who have attempted in recent years to predict the future demand and the prices of oil have had only marginally better success than those who foretell the advent of earthquakes or the second coming of the Messiah.” Akins wrote that in 1973.As Yogi Berra famously said, making predictions is difficult--especially about the future ;)
4 comments:
Yes, the price of oil is something nobody has go right - if you can you can become a zillionaire of course.
Overall, most countries outside the Oil Exporting Zone are rejoicing at the price of Oil. There are some negative effects of higher oil usage, higher pollution, etc because of the low prices, but overall, the world is a far better place with lower oil prices than high ones.
Yes, the only real downside is the price we have to pay for burning carbon ...
Plus, we will see a whole lot of unrest real soon in countries like Venezuela, Saudi Arabia ... the countries that have been able to keep their people under control thanks to the high oil prices ... 2016 could be quite a challenging year.
Falling oil income is already wreaking havoc in countries like Venezuela and Saudi Arabia. A challenging year is an understatement.
Falling gas prices have changed American car-shopping habits. We are paying less attention to fuel economy and going back to buying the bigger, less efficient cars of pre-recession times. I guess we vote with our pocketbooks and still are not convinced of the need to protect the environment by driving less and being more fuel efficient.
OMG, who are you and what have you done to the rabidly Republican Anne, whose party will expel her for writing "the need to protect the environment by driving less and being more fuel efficient"????? ;)
Yes, 2016 is going to be challenging. Which is all the more why the flippant remarks in the presidential politics is so appalling, when instead they ought to be engaging in substantive discussions that will then educate the voters who tune in. I suppose Ben Franklin knew of such days, which is why he warned that we will only get the government we deserve! :(
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