Oil Plummets… is this good or bad?
Oil prices plummeted to a one-year low below $83 a barrel Friday in Asia as investor fears of a severe global economic downturn sparked a panicked sell-off of equities and crude.
Light, sweet crude for November delivery was down $4.35 to $82.24 a barrel in electronic trading on the New York Mercantile Exchange by midday in Singapore, the lowest since October 2007. The contract overnight fell $1.81 to settle at $86.62.
This is actually a good thing… Isn’t it? Cheaper gas prices at the pump = more money in driver’s pockets.
Its going to be a vicious cycle at this point, if the economy starts to improve the price of oil will push up again, leading to another slowdown, yet the slowdown will drag the prices back down, right now we need to phase ourselves off of oil and onto Plug in hybrids and electrics and start building more solar and wind farms, push away from the need for oil and other fossil fuel sources
“The whole market has lost confidence in everything,” said Mark Pervan, senior commodity strategist with ANZ Bank in Melbourne. “Everyone is worried about global growth, and oil is the front line commodity for that. There’s just a lot of panic and fear in the market.”
Investors have been unimpressed by interest rate cuts by the U.S. and other leading central banks this week to help unclog the credit markets and promote lending. A credit crisis that began last year in U.S. sub-prime mortgages has spread across the globe, forcing governments to spend hundreds of billions of dollars to bail out banks, brokerages and insurance companies.
