burning more oil each day than is coming out of the ground, with the difference being made up from the 2.6 billion barrel stockpiles held by the OECD countries.
Every day brings new stories of coal, electric power and oil product shortages in some corner of the world. The climate too is not cooperating with significant crop failures imminent in many parts of the world and the water levels at numerous hydro dams, particularly in Asia, falling rapidly.
Behind much of oil's recent price drop is the concern among oil traders that economic growth was not going as well in the U.S. and China as had been hoped. In the case of the US this is probably not a bad concern as much of the so-called recovery that is supposed to be taking place is based on hype and selective interpretation of suspect economic statistics. In reality, there has been very little improvement in the US economy this year other than the lingering effects of 2009's $800 billion stimulus package.
This summer should prove interesting for the U.S. economy as Congress is starting to debate the debt ceiling and what are likely to be major cuts in federal spending in the next fiscal year or two. Whether cutting federal spending will help the economy grow or simply add to the scope and depth of the recession remains to be seen. More >>>