April 23, 2017

IT'S A DEFLATIONARY EPOCH:

Here's How Gas Prices Could Drop by 50% Very Soon (Brad Tuttle, Apr 21, 2017, Money)

Consumer gas prices are correlated to the price of wholesale crude oil. For months, the Organization of Petroleum Exporting Countries (OPEC) has agreed to cut production of oil, thereby keeping the supply artificially low and prices genuinely high. Yet as MarketWatch reported on Friday, global crude supplies still remain above the five-year average, partially due to increased output in the U.S. As a result, oil prices--and therefore gas prices--are lower than OPEC might hope.

Now many are speculating that OPEC will soon drop its production caps, which would allow its member to sell more oil yet likely depress prices globally. Right now, oil is selling for over $50 a barrel on global markets. But "if the cartel ends its production cap, prices could quickly collapse, potentially retesting the 2016 low of $26.05" per barrel, CBS News noted. An OPEC meeting is scheduled for the end of May, when the group could make a decision regarding production levels.


Which will make the Fed's recent rate hikes look particularly counter-economic.

But it does give the GOP an easy way to offset tax cuts.

Posted by at April 23, 2017 6:43 PM

  

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