« Bush gives up on capitalism | Burris still hasn't dotted all the "I"'s and crossed all the "T"'s in order to get seated »
January 12, 2009
Oil Prices misused as economic barometer
The price of a barrel of oil dropped below $50 in November 2008, and it has been that way ever since. Today, it's being reported that the price has dropped again; falling below $40 mark, but petroleum has been as low as $33 back in mid-December.
The conflict in Gaza did drive up the price for a short time, but the Agence France-Presse report that the rise didn't sustain itself:
"Even though the short-term geopolitical issues of Gaza are keeping the strength in oil, continuing poor economic sentiment will put a lid on prices," said Victor Shum, a senior analyst at international energy consultants Purvin and Gertz in Singapore.
As the Mainstream media continually reports that the global economic situation is the mitigating factor in the drop in energy prices, or looking at it in another way, it appears that oil prices have become the single most important economic barometer. The Financial Times reports:
Oil prices fell below the $39 a barrel level and base metals staged a broad retreat as commodity markets got off to a weak start to trading on Monday.Nymex February West Texas Intermediate fell $2.03 to $38.80 a barrel while ICE February Brent lost $1.67 to $42.75 a barrel.Analysts at Commerzbank said a renewed focus on the risks to demand has put more pressure on oil prices and pushed the WTI contract below the $40 a barrel mark.Commerzbank said Friday's US labour market data for December which showed the sharpest annual fall in jobs last year since 1945 and a rise in unemployment to its highest level in 15 years had fuelled concern about a further fall in oil demand, especially in the USA....
Oil back below $40
Due to continuing concerns that the recession is cutting into demand, crude prices head lower, despite news that Saudi Arabia plans to cut output below its target levels.
LONDON (Reuters) -- Oil fell more than $2 to below $39 a barrel on Monday, dragged down by growing evidence that recession is reducing global energy consumption.
The decline came despite news that Saudi Arabia planned to cut output to below its agreed target, as well as gas supply disruptions in Europe as a result of the Russia-Ukraine dispute and tensions in the Middle East.
Since a modern global economy is driven by easily accessed and inexpensive energy, primarily being petroleum; it would seem, even in this economy distressed time that lower fuel prices would be more indicative of an optimistic economic mood.
But what is most interesting about news reports concerning oil prices, and associated predictions, is the fact that consumers, be they in American, Europe or in Asia are not even causally mentioned. While in the same articles and in a very odd way, the impression is given that high oil prices equal a good economy.
With oil as the economic barometer, the drive to push fuel prices higher continues, but the consumers, those facing the hard economic times, have been written right out of the story.