What’s Important
The most important news story today is the passing of David Bowie who was associated with the music industry and wrote songs I didn’t like, but a lot of other people did. He was younger than me, but had been battling with cancer, which he did not advertise. It is certainly sad news for close friends and family, but the news media have gotten a bit carried away reporting on it.
Crude oil has dropped to $31 a barrel, and some talking head on a financial channel admitted he didn’t know why it hasn’t rallied.
The price is supposed to be determined by supply and demand, but you need to remember that there are two supplies involved: the supply of the product and the supply of cash available to the consumers of the product. There is an over-supply of crude oil, and the refiners have been increasing their profits by maintaining their prices while their costs have gone down. This is why the airlines are still charging extra for fuel, and the price of gas hasn’t dropped as fast or as far as the price of crude oil. When you add in the pollution problems in India and China which have caused restrictions on vehicle use to be imposed, lower oil prices have not led to higher demand. People have more necessary things to buy with their limited supply money.
January 11, 2016 19 Comments
