Less demand means cheaper oil
It's hard to believe that over the summer, oil was at a high of around $147 per barrel. Now, it's dropped down to less than half of that. Jeremy Hobson reports OPEC has cut production to curb a price drop.
A motorist pumps gasoline into his car at a Shell in San Rafael, Calif. (Justin Sullivan/Getty Images)
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Scott Jagow: The commodity price boom of the past couple years is officially over. The price of oil, which led the way, has dropped to $58 a barrel this morning. That's close to a two-year low. Marketplace's Jeremy Hobson has more.
Jeremy Hobson: It's hard to imagine that prices have tumbled 60 percent from a record $147 a barrel in mid-summer. The reason is simple: the global economy is slowing and there's less demand.
What's amazing is that OPEC has already slashed production by at least 800,000 barrels a day in an attempt to curb the price drop. And the organization may cut supplies by an additional million barrels per day when it meets next month.
Consumers are feeling the short-term benefits of the demand drop. A gallon of gas costs an average of $2.22 right now. That's down 88 cents from a year ago. Meanwhile, the head of the International Energy agency is looking beyond the current economic crisis and says the world is still going to have to deal with a looming supply crunch in the years ahead.
In New York, I'm Jeremy Hobson for Marketplace.
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