Tuesday, December 9, 2008

Why are gasoline prices so low? And why do they continue to drop?

I am becoming more and more convinced that the drop in gasoline prices has a huge amount to do with all of our credit problems (which in turn are related to limits on the oil supply). These credit problems are causing more and more defaults on debt and more and more bankruptcies. - The Oil Drum

NVDL: Oil price collapse alludes to the collapsing of the global economic apparatus, including the widespread and massive loss of wealth, entire industries (airlines, banks, automakers) and all the jobs associated with those industries.
clipped from www.theoildrum.com

We often hear that "soon" oil prices will hit a bottom, and start shooting back up again. I am less and less certain that this will be the case. Instead, I am concerned that we may on a relentless path to a point far below the point where energy companies can expect to have any chance of making money. We may be on a path toward more and more bankruptcies and defaults of all types--energy companies, owners of commercial real estate, homeowners, financial institutions, auto makers, airlines, and many more. If this is the case, there will be a huge strain on governments, and some may find it necessary to default on their debt.

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