Injury News

Despite the stock market sliding and the government bailout, there is one financial piece of news that is helping every American: the rapid drop in gas prices. Oil was reaching record prices over the summer, but has now slid close to $60 a barrel. Many people wonder how long the slide will continue, or moreover how long the prices will remain low. Nobody knows the answer for sure, but many people are comparing this to the last time oil prices went relatively sky high in the 1970’s, when it was a matter of supply and demand.

The last time oil prices went high, oil companies began producing more oil since they were making so much money, but this action eventually hurt their profits more than they expected. When oil prices, and therefore gas prices go high, many people cut back on their gas consumption, but it takes time for them to find comparable alternatives. So oil companies began increasing the supply of oil very fast, while consumers slowly began to slow down consumption, this caused the price to drop back down to normal levels quickly. The recent gas crisis started the same way, but oil companies and OPEC learned from the last time, and instead of increasing the supply of oil, the held it constant and eventually cut production slightly. Currently this is holding oil prices higher than they otherwise would be, but we will just have to wait to see what happens in the future.

Tags: demand, finances, gas prices, government bailout, oil prices, stock market, supply

This entry was posted on Saturday, December 13th, 2008 at 6:25 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.