Cheap Oil: Be careful what you wish for
 

http://www.thenation.com/doc/2009012...l=hp_currently

Only yesterday, it seems, we were bemoaning the high price of oil. Under the headline "Oil's Rapid Rise Stirs Talk of $200 a Barrel This Year," the July 7 issue of the Wall Street Journal warned that prices that high would put "extreme strains on large sectors of the US economy." Today, oil, at over $40 a barrel, costs less than one-third what it did in July, and some economists have predicted that it could fall as low as $25 a barrel in 2009.

Yes, as a Houstonian, I am hoping that oil prices stabilize.

I wrote in the gasoline prices thread that the low prices we were seeing were harbingers of doom! The reason they are low is because the rest of the economy is so dismal that demand for plastics, petrochemicals, heating oil, and gasoline are down.

Chemical companies are filing for bankruptcy, refineries are laying people off and delaying plans for expansion, which is going to be a problem in the future.

When the economy comes back around, which it will, oil prices will likely sky rocket because exploration, production and refining are taking a major hit right now.

I'm with you, srmom. I've warned of deflation before - and I'm bracing myself now that the recession is hitting us hard. I think we had a bit of a buffer with the oil industry for a while.