By Mark Huffman
ConsumerAffairs.com
September 22, 2008
Uncertainly and anxiety over a U.S. Government plan to bail out
investment banks has sent oil prices sky high, in a record $25 a
barrel one-day jump. The price of light sweet crude for October
delivery his $130 a barrel before settling back at just under $124.
No shortage or supply disruption is behind this breathtaking move. Analysts say traders looking for a safe haven for their assets dumped their dollars and began buying commodities. Even though the price of oil had been sinking toward $80 a barrel in recent weeks, economic panic has moved it back within striking distance of July's record highs.
Traders spent much of the weekend trying to digest the U.S. Government's proposal to buy up much of Wall Street's untradable mortgage securities. Few specifics of the plan have been detailed, but the general price tag for taxpayers has been put at between $700 billion and $1 trillion.
Today's move in oil prices may, or may not be lasting, analysts say, depending on what happens next in the credit crisis. Market fundamentals had been pushing the price lower over concerns that the world economy was slowing, and would require less oil in the immediate future.
Gasoline prices, meanwhile, have been moving higher for more than a week after Hurricane Ike caused Gulf Coast refineries to be shut down temporarily. The refineries suffered little or no damage during the storm and are in the process of being brought back on line.
