Friday, August 15, 2008

A Huge Sigh of Relief

This is my virtual sigh of relief. The week is ending with oil down to $113 a barrel, and the dollar gaining ground. I feel we are now in manageable territory. At this price, industries and consumers should be able to cope.

At $147 a barrel, I believe we were facing economic implosion. The economy was already limping due to housing woes and the credit crunch.....expensive oil and commodities would have been the fatal shot to the heart.

This is not to say we should throw a party. $113 will still be tough going for many industries, like aviation, but 23% is certainly worth a sigh of relief.

4 comments:

Cmyst said...

Believe me, this is another area where I'd rather be wrong. My own personal family traumas are mounting quickly.
Now, oil at over $140/barrel was speculation and we all know it. And with a world-wide economic slowdown, maybe China and India won't be needing so much of it after all. But ultimately, it is a non-renewable resource and there is a point at which it takes more energy to get it out of the ground than you will get from it. (If it takes a gallon of gas to drill for a gallon of gas, no drilling will happen no matter how much oil is still in the ground -- a fact that many people seem to find difficult to grasp.)
We either use whatever time we've bought with our reduced demand to get on the road with a variety of other energy sources, or we doom our kids and grandkids to a much lower standard of living than we have enjoyed.
And the dollar? I don't think anything has fundamentally changed to make the dollar worth more, and I think that many things have conspired to make it worth less.

sacramentia said...

I'm hoping lower oil and the stronger dollar give the fed enough room to cut again and help out unemployment.

Patient Renter said...

I don't think anything has fundamentally changed to make the dollar worth more, and I think that many things have conspired to make it worth less.

This is directly in line with my thinking. We just saw legislation passed which will ultimately amount to the costliest public bailout in world history. The idea of a strong dollar is a joke.

sacramentia said...

The idea of a strong dollar is a joke.

True, but this is a race to the bottom for the most worthless fiat currency and relative interest rates around the world matter too.