Falling Oil Price Is A Positive Note Amid Turmoil, 10/02/08

After months of record-high oil prices that crippled airlines and automakers, drove up gasoline and food costs, and thinned out wallets across the land, American consumers now have a reprieve from the battery. The recent decline in oil prices is expected to put billions of dollars back into consumers' wallets and help the shaken economy. Ben Bernanke, Chairman of the Unitd States Federal Reserve, referred to the decline in oil prices as a "positive note" in a recent address to Congress. Although American consumers are happy with decline, oil producers in foreign nations are feeling the effects of the decline in prices. Mexico may have to cut its budget for next year following the drop in petroleum revenues, and countries like Venezuela and Russia may be forced to scale back enormous energy projects that require enormous funding. While OPEC has said it will step in and try to scale back declines in price by cutting production, its most powerful member, Saudi Arabia wants to keep oil below $100 per barrel. Whatever action OPEC takes, weaker global growth and demand are likely to keep prices relatively low. “The fall in oil prices is equivalent to a new stimulus package for consumers,” said Lawrence J. Goldstein, an energy analyst at the Energy Policy Research Foundation. Goldstein calculates that each drop of $10 a barrel in the price of oil lowered the nation’s annual bill by about $70 billion. That is $230 for every American.

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