What Goes Up, Must Come Down

“Mr. Greenbacks, Back in March you said oil prices are on the rise and we could see $5 gas by summer.  What happened?”

Well, Europe happened. . . and China happened.  So basically, fear has taken over.  When I posted Pain at the Pump back in March, Europe was but an afterthought for the world’s markets.  After years of worrying about Greece, people began to forget about it and concentrated more on the good news rather than the risks that lay ahead.  Then all of a sudden Greece became a very real and imminent problem.  Spain and Italy also contributed to this fear and finally it appeared that China was going to come in for a ‘Hard Landing’ – meaning that their rapid growth rates of >10% a year may not continue.  China in fact has been the engine that has been driving most of the worlds consumption, whether it be oil from the Mid-East or Africa, iron ore from Brazil, or coal from Australia.   So now fears of a new global turn-down seem very real, hence the drop in crude prices.  As of 6/6/12, the spot price of BRENT and WTI have come in to $100 and $84 respectively.  This drop will soon reflect in lower prices at the pump, but lets not forget what $4/gal of gas felt like.  Lets use this opportunity to continue our push for more efficient usage of our resources.  After all, this too shall pass, and the economy will begin to grow again.  When demand kicks up you will see an increase in prices yet again, and we will be back to square one.

1 thought on “What Goes Up, Must Come Down

  1. Pingback: Gas Prices (again) | Mr. Greenbacks

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