Wednesday, December 10, 2008

Spec-tacular

Earlier this year the global financial meltdown began, taking a number of large banks with it.

Shortly thereafter, oil prices began dropping from a high of over $4 per gallon to the present price of under $2 per gallon.

So my question is this: Did the worldwide recession drive the decline in oil prices, or was the run up purely the result of speculation driven by the large trader banks and hedge funds that no longer exist?

Discuss.

Bonus topic: My utility company raised their rates earlier this year due to increasing fuel costs. As expected, this combined with a weakening economy encouraged people to decrease consumption. As a result, the utility company is now seeking a 4.8% rate increase next year and a 17.9% increase over the next five years due to two factors (1) contractual fuel purchases and (2) reduced consumption by ratepayers resulting in shortfalls in projected revenue.

So, in summary, if we use more power rates go up, but if we conserve energy...erm...rates go up.

I really need to move.