Editorial: Oil’s rise … and fall?
Vail Daily Editorial Board
Vail, CO Colorado
Don’t get your hopes up, but there may be some hope for relief from soaring fuel prices even as oil heads toward $110 per barrel and gasoline seems destined to pass $4 per gallon long before Memorial Day.
Analysts are famous for being wrong, but Michael Lynch, president of Strategic Energy and Economic Research Inc., was recently quoted by Toronto Globe and Mail writer Shawn McCarthy as predicting a serious pop in oil’s bubble.
“It’s hard to argue that prices should be higher (now) than they were not too long ago,” Lynch said.
Lynch has forecast that the oil bubble, fueled by speculators, could burst hard, with prices perhaps crashing to $50 per barrel.
If it happens, the only people crying will be oil company stockholders and those speculators. Everyone from commuters to summer vacationers will positively glow if the price of gas drops to even $2.50 a gallon or so. A crash in the price of oil this spring would be a far greater tonic for the consumer-spending-fueled national economy than the taxpayer-funded “stimulus package” recently passed by Congress.
The other side to this potentially shiny coin, though, is that cheap oil is what’s kept us from developing realistic alternatives to it. If the price of oil does crash, we need to hold the course in research and development of alcohol, solar and other substitutes for dino-juice. What goes down can go right back up, after all.
But between the mortgage market’s collapse, the current credit crunch and what seems to be an inexorable slide into a recession, our economy can’t seem to catch a break right now. If you’re in the car market, a smaller vehicle is probably still a safer bet at the moment than a big SUV.
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Are we seeing more bears because there are more bears on the valley floor, or because we’re all spending more time at home? It could be a bit of both.