Drop In Oil Price – Bush, Bernanke, and Unexecpected Supply Increase
July 16th, 2008 by Damon CliffordWe’ve seen the price of oil drop more than $10 over the last two days.
President Bush
On Monday, Bush lifted the legislative ban on offshore drilling when he gave his speech on the White House lawn. Now it will be up to Congress to approve lifting the ban before anything can happen.
But the move, by itself, will do nothing unless Congress acts as well to lift its own drilling ban. There are two prohibitions on offshore drilling, one imposed by Congress and another by executive order signed by the first President Bush in 1990.
This may or may not happen in Congress, but it will put more presser on them to do something in regards to energy.
Ben Bernanke
Also on Monday, Federal Reserve Chairman Ben S. Bernanke said that slowing growth and inflation have risen.
Yesterday’s 4.4 percent drop in New York crude oil futures was the largest since March, as Federal Reserve Chairman Ben S. Bernanke said that risks to U.S. economic expansion and inflation have risen.
“The enormous jumps in oil prices and other commodity prices are, to some extent, due to real factors out of the control of the Federal Reserve,” Bernanke said before the House Financial Services Committee today. “The Federal Reserve cannot create another barrel of oil, it’s the global supply and demand.”
Unexpected Supply Increase
Yesterday, reports came out that there was more oil than expected in inventories:
Crude oil futures fell more than $4 a barrel in New York after a surprise increase in U.S. inventories and as a slowing U.S. economy sapped demand for energy.
Even though the prices at the pump hasn’t changed, it’s amazing what big news this is. This is another reason why we need to be developing alternative energy sources so we’re not so dependent on a commodity produced by foreign nations.
A barrel of oil closed at $134.60 on Wednesday.
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