A new report today confirmed that Japan is in recession. And one of China’s leading oil companies, CNPC, says demand has fallen sharply. These declines in demand out-muscled the news of pirates taking a Saudi Arabian supertanker off Kenya coast to send prices to their lowest level since January 2007 at ~$55 per barrel.
US pump prices of gasoline continued their record drop at 61 straight days falling to less than $2.10 per gallon. I now see the possibility of gasoline to fall below $2 per barrel for at least a number of weeks. But the bullish factor of colder weather (increasing heating fuel demand) may stabilize the price soon — the lower 48 states are a bit colder than normal for mid-November as the high here in NYC is predicted to be in the 30s for the next two days. We will see what Wednesday’s oil report and Thursday’s natural gas storage numbers reveal about fuel inventories as the heating season commences.
Bottom line: Widespread recession is lowering demand faster than OPEC cuts and non-OPEC declines for the time being. The resulting lower greenhouse gas emissions and lower energy prices could help stabilize our climate and our checkbooks — as long as we base our 2009+ economic recovery on energy efficiency rather than reverting back to our gas-guzzling, energy insecure ways of a few years ago.