A bit of good news..?

Cannon_Fodder

http://news.bbc.co.uk/1/hi/business/7672069.stm

this must be good news...lower petrol prices will take some of the heat out of inflation, so making interest rate cuts possible to stimulate the economy.

...unless its the effect of the already contracting economy which is demanding less fuel, so unemployment will beat the rate reductions...?

Realy

Cannon_Fodder wrote: »

http://news.bbc.co.uk/1/hi/business/7672069.stm

this must be good news...lower petrol prices will take some of the heat out of inflation, so making interest rate cuts possible to stimulate the economy.

...unless its the effect of the already contracting economy which is demanding less fuel, so unemployment will beat the rate reductions...?

Dated Brent is $67 that is 55% drop in the last few months.:eek:
http://www.bloomberg.com/energy/

moneymass

Cannon_Fodder wrote: »

...unless its the effect of the already contracting economy which is demanding less fuel

I believe it's this. Infact OPEC knew about the decrease in demand and were planning on increasing the POO (:D), don't know what's happening with that now though.

Generali

Cannon_Fodder wrote: »

http://news.bbc.co.uk/1/hi/business/7672069.stm

this must be good news...lower petrol prices will take some of the heat out of inflation, so making interest rate cuts possible to stimulate the economy.

...unless its the effect of the already contracting economy which is demanding less fuel, so unemployment will beat the rate reductions...?

My answer is 'B'. Yup final answer.

My guess is that oil will end up fluctuating between about $30-$50/bbl. Of course if you've lost your job because you work in a bank or as a builder then you still won't be able to afford to fill the petrol tank.

carolt

But for those who keep their jobs, it must make it a bit easier, likewise predicted falls in food prices etc.

Realy

carolt wrote: »

But for those who keep their jobs, it must make it a bit easier, likewise predicted falls in food prices etc.

your right Carol and we must remember that will be the vast majority of the population.
Giving them more spending power will create new jobs etc.

WTF?_2

Generali wrote: »

My answer is 'B'. Yup final answer.

My guess is that oil will end up fluctuating between about $30-$50/bbl. Of course if you've lost your job because you work in a bank or as a builder then you still won't be able to afford to fill the petrol tank.

That low? Hasn't most of the cheap-to-extract stuff been exhausted already and it costs something like $30 just to produce a typical barrel?

slipthru

Generali wrote: »

My answer is 'B'. Yup final answer.

My guess is that oil will end up fluctuating between about $30-$50/bbl. Of course if you've lost your job because you work in a bank or as a builder then you still won't be able to afford to fill the petrol tank.

Go on admit it, you have insider knowledge.

I heard at the end of july that oil would come back down to $50 a barrel I think it was $150 at the time.

carolt

Realy wrote: »

your right Carol and we must remember that will be the vast majority of the population.
Giving them more spending power will create new jobs etc.

I'm less optimistic about it creating new jobs, but hopefully it might keep the wolf from the door for a fair few.

Generali

!!!!!!? wrote: »

That low? Hasn't most of the cheap-to-extract stuff been exhausted already and it costs something like $30 just to produce a typical barrel?

True but short-term there's little connection between the price of oil and the cost of extraction as such a large proportion of the cost of extraction is a fixed, sunk cost (oil rigs, pipe-lines and so on).

Long-term of course the POO should tend towards the marginal cost of extraction. However, the long term is just a series of short terms really so the POO can remain out of sync for a very long time.

For an example of this, look at the tin mining industry - the price of tin was far below the cost of extraction for a very long time; decades perhaps. The production of tin kept rising all the while as producers tried to chase market share, hoping that competitors would go bust first.

slipthru wrote: »

Go on admit it, you have insider knowledge.

I heard at the end of july that oil would come back down to $50 a barrel I think it was $150 at the time.

If I had insider knowledge I'd be in the Bahamas with the double-jointed Johanssen triplets suffering from chronic fatigue, not posting on a website.

adr0ck

!!!!!!? wrote: »

That low? Hasn't most of the cheap-to-extract stuff been exhausted already and it costs something like $30 just to produce a typical barrel?

you could say the same with building houses

i.e. they can only fall so far due to cost to build