Is the price of oil coming back down to earth?
August 6, 2008 by Tisa Silver
Filed under Finance
On July 11, crude oil hit a record of $147.27 per barrel and on July 16, the nationwide average for regular unleaded gasoline hit a record of $4.114 per gallon.
Less than one month later, the price of oil has dropped just below $120 per barrel and the price of gasoline has dropped to $3.862 per gallon. The price moves reflect decreases of 19 percent and 6 percent, respectively.
Does this mean that oil and gas prices will soon return to reasonable levels? We will have to wait and see. In the oil markets, a “reasonable” price level is always up for debate. Concerns regarding any change to supply and demand arise and must be factored into prices.
But, how do we determine if these concerns are efficiently factored into prices?
I’ll leave that to the regulators. But, I am having a hard time believing that this season’s volatility can be totally attributed to shifts in fundamentals. What do you think?
