Oil Prices below $100 for first time in six months
September 16, 2008
Oil has gone below $100 for the first time in six months. The reason for the drop? Expectations for low demand due to a sagging economy.
The demise of Lehman Brothers who declared Chapter 11 bankruptcy Monday after failing to find a buyer over the weekend put all the markets in a tizzy. And the belief in the oil markets that a major, worldwide economic downturn will follow brought prices down. The oil selloff was probably an overreaction to the news, and we’ll likely see priced edge up again in the next few weeks after AIG and Merrill Lynch work out their own problems.
Should we be surprised at what is going on in the markets rigth now? No. This is proof that market forces are working their “magic.” Situations like the current economic downturn are not abnormal or uncommon. The severity of the problem has come about because of the exasperating influence of easy money in the real-estate market. Those who gambled lost and we will all pay a bit now. But we are paying, and this strongest, most free market in world history will survive and thrive another day.
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