Suitably Flip

Oil Plummet Nears 30%

In less than two months, oil prices have tumbled very nearly 30%.  As of Tuesday midday trading low of $103.46 per barrel, front month futures were 29.9% lower than their mid-July high of $147.50.

So far, the collapse in oil prices has basically stuck to the bursting bubble script, so it's potentially worth noting that the -30% mark was roughly where the Nasdaq bubble burst took a breather.  After fluctuating around that level for a few months though, the hemorrhaging doubled to 60% and more.

But let's assume we don't see oil take a comparable secondary dive to $60 per barrel.  (With multiple named storms still stewing in the Atlantic, humility in cheap oil expectations is probably well-advised.)  Still, if prices were to level off where they are now, the difference in the inflation picture (compared with how it looked just 60 days ago), not to mention the outlook for corporate earnings, consumer spending, and economic vitality in general, is stark.

As of today, the one-year change in crude prices is +34%.  A steep twelve month increase, but nothing compared to mid-July, when it was +99%.  That's a fairly radical change in assumptions for anyone forecasting operating costs, purchasing power, or output growth.

Falling oil prices represent a welcome, all-boat-lifting swell tide (save oil company boats, of course).  Swifter growth + lower inflation = happy economy.

Update: The 30% mark has now been officially surpassed. Since putting up this post, oil prices have continued to tumble toward $100 (currently $102.50). Think this has anything to do with it? (HT: Ed Morrissey)

Drill baby drill.

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Oil Plummet Nears 30%

In less than two months, oil prices have tumbled very nearly 30%.  As of Tuesday midday trading low of $103.46 per barrel, front month futures were 29.9% lower than their mid-July high of $147.50.

So far, the collapse in oil prices has basically stuck to the bursting bubble script, so it's potentially worth noting that the -30% mark was roughly where the Nasdaq bubble burst took a breather.  After fluctuating around that level for a few months though, the hemorrhaging doubled to 60% and more.

But let's assume we don't see oil take a comparable secondary dive to $60 per barrel.  (With multiple named storms still stewing in the Atlantic, humility in cheap oil expectations is probably well-advised.)  Still, if prices were to level off where they are now, the difference in the inflation picture (compared with how it looked just 60 days ago), not to mention the outlook for corporate earnings, consumer spending, and economic vitality in general, is stark.

As of today, the one-year change in crude prices is +34%.  A steep twelve month increase, but nothing compared to mid-July, when it was +99%.  That's a fairly radical change in assumptions for anyone forecasting operating costs, purchasing power, or output growth.

Falling oil prices represent a welcome, all-boat-lifting swell tide (save oil company boats, of course).  Swifter growth + lower inflation = happy economy.

Update: The 30% mark has now been officially surpassed. Since putting up this post, oil prices have continued to tumble toward $100 (currently $102.50). Think this has anything to do with it? (HT: Ed Morrissey)

Drill baby drill.