Oil Prices Set to Plummet

It’s Paul’s view, I think, that of all of the factors that have put Republicans behind the eight-ball this year, one of the most important has been the high price of gasoline. Only the state of affairs in Iraq, and perhaps not even that, has been as important. While no one seriously thinks that the Bush administration has anything to do with the price of oil, I agree with Paul that the immediate hit to consumers’ pocketbooks and the attendant darkening of the economic picture have been a huge factor in popular discontent.

So it’s exciting to see that the price of gas has been falling, and may fall much, much further:

The recent sharp drop in the global price of crude oil could mark the start of a massive sell-off that returns gasoline prices to lows not seen since the late 1990s — perhaps as low as $1.15 a gallon.

“All the hurricane flags are flying” in oil markets, said Philip Verleger, a noted energy consultant who was a lone voice several years ago in warning that oil prices would soar. Now, he says, they appear to be poised for a dramatic plunge.

Crude-oil prices have fallen about $14, or roughly 17 percent, from their July 14 peak of $78.40. After falling seven straight days, they rose slightly Wednesday in trading on the New York Mercantile Exchange, to $63.97… But the overall price drop is expected to continue, and prices could fall much more in the weeks and months ahead.

[M]any of the conditions that drove investors to bid up oil prices are ebbing. Tensions over Israel, Lebanon and Nigeria are easing. The hurricane season has presented no threat so far to the Gulf of Mexico. The U.S. peak summer driving season is over, so gasoline demand is falling.

Should oil traders fear that this downward price spiral will get worse and run for the exits by selling off their futures contracts, Verleger said, it’s not unthinkable that oil prices could return to $15 or less a barrel, at least temporarily. That could mean gasoline prices as low as $1.15 per gallon.

Other experts won’t guess at a floor price, but they agree that a race to the bottom could break out.

Could be another election “issue” going up in smoke for the Democrats.


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