SAME WORLD, LESS HYSTERICAL:

Oil Prices Plunging, Amid Warm Winter (DAVID LOMBINO, January 12, 2007, NY Sun)

The price of oil has dropped about 34% since summertime, a reflection, analysts say, of abnormally warm winter weather and the growing improbability of a wider war in the Middle East.

The price of crude oil, which was below $11 a barrel in 1998, soared to a record-high in mid-July of $78.40 a barrel. Over the summer, rising oil prices caused concerns about inflation and the economy, sending stocks tumbling and gasoline prices soaring. At the time, some analysts predicted the price would surpass $100 a barrel.

Since then, however, oil prices have plummeted, falling about 15% in the first two weeks of 2006. As of close yesterday, the price of light sweet crude oil on the New York Mercantile Exchange fell below $52 a barrel, its lowest in 20 months. That may eventually translate into lower gasoline and heating oil prices for consumers, easing worries about inflation that the Federal Reserve has been considering in setting interest rates. "Since August, the price drop is one of the biggest in history," an energy analyst for Alaron Trading Corp, Philip Flynn, said. "Basically, we have a different world than we had in August. Then, we were paranoid about the hurricane season, and concerned about a war between Israel and Hezbollah. The world was a very scary place."

If you meet the homo economicus, kill him.

Posted by Orrin Judd at January 12, 2007 12:52 PM