"That is the largest and longest continuous glut of supply that I have seen in 30 years of following energy prices . . . It's a huge surplus. There has never been anything like it."
-Philip Verlerger, expert on energy markets at the University of Calgary
There is now serious talk of $20 and $30 oil coming our way because of huge excess oil inventories stored around the world. One of the commenters at Naked Capitalism points out that China is (wisely) taking an opposite tack to what the fools in D.C. are doing, and buying oil while the buying is cheap. Every nation in the world should be trying to increase their strategic petroleum reserves, not talking about selling them off in a misguided attempt to relieve momentary price spikes!
Gee, I wish somebody, anybody, could have seen the low oil prices coming. Oh, wait.
By the way, according to my rule of thumb, oil in the $20 to $30 range will get us gasoline at ONE DOLLAR per gallon. At that price point, federal and state taxes start making my rule break down a little, but it's still "close enough for horse shoes and hand grenades."
Keen observers will note that falling fuel prices will probably spur economic development just as the "stimulus" package spending really kicks off. These two factors will combine to form an illusory 'recovery' in the economy. Don't worry, pessimists. When the work (NOT jobs) created by the stimulus package dries up, the economy will dry up again as well, and then we're STILL left with huge overcapacity in every sector of the international economy except energy, and there will follow a possibly-very-nasty Double Dip. MIchael Shedlock already made the call for a triple-dip in 2010 or 2011. We'll see.
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