Price drop is baking in predictions about the near future demand (poor economy). It is also due to the rising value of the dollar. The low dollar was most of the raise we saw before anyway. The US is in a period of disinflation right now, and if the current quarterly numbers keep going, we'll be in full-blown deflation (only difference is time frame, deflation is annual rate negative, vs quarters, months, etc). Add to it that $4 seems to be a magic number, below that they cannot keep guzzlers on the lot, above that, they can't keep hybrids on the lot. Supply and demand.
There is no such thing as a "windfall profit." The notion of the oil companies "raping" us is absurd. They had record DOLLAR profits, but they only cleared around 8% profit. Any rule claiming "excessive" profits should be taxed needs to set up an algorithm that applies to ALL financial transactions. Sell your house for more than 8% return, and BAM, "windfall profit" tax for you!
How many will cry if the oil companies go back to their more historically normal rates of return? Maybe we can bail them out then.
|