Oil below $87 on global recession fears

October 9, 2008

VIENNA, Austria--Oil prices dipped below $87 a barrel Thursday with the downward momentum slowed somewhat by continuing chatter from OPEC nations about an emergency meeting to address the market slide.
 
Light, sweet crude for November Delivery fell $1.97 to $86.98 a barrel in morning trading on the New York Mercantile Exchange, after fluctuating between positive and negative territory earlier in the day.
 
The contract fell $1.11 on Wednesday to settle at $88.95 after earlier edging below $85 - a key technical level that some traders believe could lead to another plunge.

Crude has shed about $60 - or 40 percent of its value - since soaring to a record $147.27 on July 11. The massive losses come as a global financial downturn forces people and businesses everywhere to cut back... .
 
"Overall demand for oil fell for a fifth straight week and year-on-year demand fell for a 24th straight week" this year, noted trader and analyst Stephen Schork in his Schork Report. "In fact last week demand ... fell to the lowest level since the week following the 9/11/2001 attacks."

Demand for gasoline was also weaker, falling 5.3 percentage points over the four weeks ended Oct. 3 compared to the same period a year earlier, according to the EIA report... .
 
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Can anyone explain to me why I should identify with hand-wringing New York Mercantile Exchange traders, shareholders, and analysts who are crying about sliding crude oil prices?

Like millions of other Americans, I subsist on a limited but fixed retirement income.  That income is in no way linked to the vagaries of Wall Street or any commodities exchange.  There are no portfolios in my life.

Should crude oil prices continue to slide because an economic downturn has produced a glut in inventories, my gasoline may eventually cost less than the present $3.50 a gallon I am forced to pay when gassing up my old truck with as much as a $20 bill will buy.

So, why are falling crude oil prices not good news for me?

Why should I give a damn that men and women who can afford to hold blocks of crude oil futures--or the commodity traders with whom they are in consort--are wringing their hands because they, as members of corporate capitalism's investor class, will see smaller quarterly dividends or commissions next time around as their commodity of choice loses value?

What is that to me?

Many middle class Americans and most economically deprived Americans are forfeiting their homes, health, lifestyles, and dignity to buy gasoline each week.

Yet, when natural market forces--the law of supply and demand--suggests that gasoline prices may fall, we are subjected to endless lamentations from the investment sector about the calamity that falling crude prices represents.

Calamity for whom?

What is good for a free market capitalist is often bad for the rest of us.

But they would seek to persuade me that I am simply too ignorant to understand that what is good for them is actually good for me too.

I reject a lifetime of brainwashing by corporate capitalism's spokespersons and cheerleaders who are always peddling their trickle down horse and sparrow economic theories.  As with a humble sparrow that hopes to find a few oat grains in a horse's waste, a poor person in America is expected to be ever so grateful for any little economic mite that trickles down from an investment capitalist's excesses.

I can't see that from my perspective here in Podunk.

When gasoline retreats to $2, that will be good for me by any measure.  I might even be able to drive to my regional commercial center again after half a year of penury.

And when I go, I will not care one whit that NYME spokespersons and analysts are crying over lost fortunes.

Better they lose their fortunes than I lose my rusty wheels.