Oil prices fell almost $5 this morning, settling (for now) at $63 and change per barrel.
Analysts expected prices to dip to $50 by next year. Remember when oil was $50 a barrel? Gas stations were charging somewhere between $2 and $2.50 a gallon. Do you remember a time when gas was less than $2 a gallon? I do.
There are any number of reasons for why the price of oil shot up so much these past few years: increased demand from China and India, the war in Iraq, hurricanes and other supply disruptions, inflation, and market correction because the U.S. artificially kept the price of oil down for so many years. Now worldwide demand has dropped and so have prices. Will we see a return to the pre-2000 prices of $20 a barrel and $1 at the pump? Unlikely as OPEC wants that less than it wants prices skyrocketing (thus causing the drop-off in demand). But we may see the market settle around the $50-$60 range – if this new-found ability to conserve continues.
The Big Lipowsky – who walked to the office today – can live with that.