With crude oil trading down to $126 a barrel, though some are still touting the price is moving to $200, or even $300 a barrel, it actually looks more like it is heading to at least $100 barrel. With growing sentiment in Congress, even among mainstream Democrats, to accept President Bush's proposal to do more drilling, the market has taken this as a signal that the government is serious about taking action to bring down prices at the pump. If the Democratic leadership would get on board, the current drop in crude prices would be nothing compared to what could happen.
Coupled with projected slower growth in emerging markets, most notably China, where we could see GDP growth slow by more than 2%, why should the price keep moving higher?
it's important to note that the decline we have witnessed over the last few weeks should result in a drop of over 50 cents a gallon at the pump. Coupled with people driving less, thus easing the demand, the increased supply, or the potential of increased supply on the market should help keep prices moving down.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. DISCLOSURE: Writer's fund has no position in any stock mentioned, as of 7/23/08.











Reader Comments (Page 1 of 1)
7-23-2008 @ 10:23AM
Robert Alexander said...
This is just the beginning of energy independence. It is important that as gas prices decline, we do not go back to our old ways. Producing clean, renewable energy for less than the cost of oil is the only way to win the war on terror. When they have no money coming in off their oil, it will be impossible for them to finance the acts of war. Replacing oil with algae, switch grass, and waste digestion systems is only a beginning. We can use geothermal to heat and cool our homes, factories, offices and government buildings (it is everywhere, just a few feet down). We can produce commuter cars that get the equivalent of over 200 mpg by making them light, 2 passenger, plug in vehicles. These can be produced for under $10,000, as some are being built for that now. We can bring down the cost of lithium ion batteries by mass producing them. We can use public transit instead of driving. We can produce energy close to the end user and save the energy wasted in transporting oil thousands of miles. Yes, we can make a difference! Barack Obama has a plan to invest in such changes. Barack Obama in 2008!
7-23-2008 @ 10:30AM
Robert Alexander said...
Drilling is not an answer and not the reason the price is going down. Conservation is! We are serious about not using as much gas and oil. We are replacing oil with alternatives. Ford is producing smaller , more efficient cars as will all auto makers. We will see a new commuter car that gets the equivalent of over 200 mpg, there are some being built now, but with improvements in batteries and mass production the price will come down to under $10,000 and the range and speeds will increase at the same time. Geothermal heating and cooling will replace fossil fuel heating and cooling. Switch grass, algae, and wastes will replace oil. Airlines will use jet fuel produced in algae digestion factories located to capture carbon emissions from coal fired power plants! Yes, we can change the way our energy is produced, distributed and priced. Barack Obama has such a plan to build an energy industry for America's future.
7-23-2008 @ 1:10PM
NYCBanker said...
c nakdimen , think about the simple economic theory of supply and demand. Why is decreasing the demand not a good idea to keep the price down?
I find it funny that all your blabble is the typical neo-con (moronic) rhetoric and talking points. Please why don’t you use simple use logic and think for yourself.
7-23-2008 @ 4:15PM
moonie said...
liberalistic inventism congregates the rheroteric non-theory on doministic thinking. Only by the threat of drilling for new oil alone will help bring down gas prices.Then Drill the oil get it out to our coffers. Opec neurologists way of thinking controls the supply.Next conservation.Use our natural gas we have more of it than most of all countries excepting Iran has a lot some others.Why buy Iran natural gas and help them build more nuclear.duh! conserve conserve conserve then explore all these other options by the time we get switchgrass and other supplies which take years to produce,when we can conserve now ,will add to our energy coffers while watching opecker oil go back down
7-23-2008 @ 4:50PM
hambleton said...
you guys always have to turn issues into political battling. and you wonder why we are in this mess.
7-23-2008 @ 8:25PM
Mike Sanders said...
I look for oil to stop dropping, when it gets below $97 a barrel... Unfortunately, this may spell death for many of the solar-energy initiatives, which are just getting into gear, but it's absolutely necessary for oil to leave triple-digits! Fundamentally, oil is really worth about $55 to $60 a barrel and that's where it belongs. To keep it there, though, drilling, conservation and alternative energy, must act in concert. A three-pronged attack, such as this, is what energy-independance is all about. No single factor, is adequate to protect America. Drilling faster, driving slower and using solar/wind/geo-energy where it makes sense, is mighty convincing!
7-24-2008 @ 10:47AM
c nakdimen said...
Robert Alexander, think about the simple economic theory of supply and demand. Why is increasing the supply not a good idea to keep the price down?
I find it funny that all your blabble is the typical liberal (communist) rhetoric and talking points. Please why don’t you use simple use logic and think for yourself.
7-24-2008 @ 10:54AM
nak c said...
NYCBanker yes you are correct, less demand will decrease the price. But I don’t think the demand is ever really going to stay down unless you want to stop China, India, and all the other developing countries from moving forward.
My question is why shouldn’t we drill?
7-25-2008 @ 3:57PM
David said...
Robert Alexander either has his head burried in a bucket of 40 weight or is the biggest idiot this side of Inan