Oil Prices Easing

Oil prices have retreated from their nominal high.

Oil retreated after hitting record levels earlier today as conficting reports about Israel’s intentions in Lebanon put the markets on edge, also sending gold down from two-month highs. US stock futures slipped, suggesting a lower market opening with earnings reports from companies including Citigroup and McDonald’s failing to provide a boost.

I wonder how much of this is related to the offer of a cease fire that Greg Tinti mentioned.

Brent crude futures hit record highs of $78.18 per barrel early today, but fell back to $76.52 before rallying again to $77.21 as traders reacted to often-conflicting reports from the Middle East.

And here is my obligatory note that while these are indeed nominal highs for the price of oil, in real terms the price is well below $95 (approximately) that we would need to see before the previous high will be broken. And yes, increasing prices, even below the high in real terms, has negative consequences for the economy.

FILED UNDER: Economics and Business, ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.

Comments

  1. Herb says:

    Steve:

    I am pleased that you have finally come to the conclusion that these high oil prices are hurting the economy, Big Time. forgetting real terms, of course. And in real terms, Americans are realizing real terms in their paychecks.

    There is absolutely NO REASON for consumers having to pay $ 3.00 plus for a gallon of gasoline. There are adequate supplies on Hand and there are no shortages anywhere in the US. With that in mind, your old fallback of “supply and demand” are not proving to be a factor in pricing. Now, you, as most Americans know for sure, know that oil pricing are the result of a few old time crooked riverboat gamblers fixing artifact prices on the NY exchange, in order to satisfy their lust for the almighty dollar. In other words, “Just plain old GREED”

    If these high gasoline prices continue, then you can look forward to an economic disaster and large scale rebellion by the public, if the oil companies post another record quarter for profits.

  2. Herb says:

    Whatever happened to “Supply and Demand” ?

    This old favorite “Excuse” seems to have run its course and is “No Longer a Factor”

    Now, I wonder what “NEW EXCUSE” the oil companies will use to explain to the public their reason for these Criminally High Gasoline Prices”

    I will bet the oil companies will post “New Record Profits in the Next Quarter”

    The Republicans had better get off their lazy asses and do something or they will “Lose Big” in November”

    Just wait, The Next President in 2008 will be decided by the price of a gallon of gas and the power in Con grass will be decided by the same this November.

  3. Steve Verdon says:

    Herb,

    I think it is well past time you stopped living in this fantasy world that the politicians are going to suffer due to high gasoline prices, that oil companies are the sole reason for high prices, etc.