Won't Anyone Buy Some Oil?

John Horner
by John Horner

OPEC’s threatened 2 million barrel/day output cut has done nothing to halt oil’s collapse. The AP reports that Wednesday’s futures market dipped below $40/barrel for the first time since 2004. Markets are spooked by the realization that even mighty China is in a world of growth hurt at the same time as an unprecedented continued fall in US demand. US “demand for gasoline over the four weeks ended Dec. 12 was 2.7 percent lower than a year earlier.” “‘There’s just so much oil in inventory out there right now,’ said Michael Lynch, president of Strategic Energy & Economic Research. ‘Nobody wants to buy this stuff.'”

The demand collapse continues even though this year’s Dec. 8 retail price was $1.699/gallon, down 44% from last year’s $3.038. Watch out below, $1/gallon here we come since the wholesale gasoline futures market has January delivery gasoline at $1.0055. Retail prices slightly higher, your mileage may vary, see local dealer for details. Hmmm, it might be time for one last big road trip.

John Horner
John Horner

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  • PeteMoran PeteMoran on Dec 18, 2008

    It's going to take some intestinal fortitude to push ahead with renewables in this oil-price climate, which will be tragic in a decades time. It also seems to have got people out buying trucks again which is equally depressing. At least those are credit approved this time. Can't anyone in the USA think further than next quarter?

  • 50merc 50merc on Dec 18, 2008

    Damn those evil Big Oil companies, now they're manipulating prices so they can lose money on what's in inventory!

  • Psarhjinian Psarhjinian on Dec 18, 2008
    I’m as non-commie as they come, but there’s a Price Stability argument to be made for a variable imported tariff (that gradually fades to zero as prices rise) to encourage domestic production. Heh. Welcome to bizzaro-world, where the socialist is arguing for deregulated pricing and the free-marketeer is supports government-backed price controls.
  • Quasimondo Quasimondo on Dec 19, 2008

    What I want to know is what happened to those folks who confidently boasted that oil would NEVER EVER EVER go under $100/bbl EVER again?

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