Cheap gas is here for a while longer

OPEC is planning on a 2 million bbl/day cut. The price of crude went up to about $47/bbl in the last few days.

Whoops. There it goes again.

“A 2 million-barrel cut is probably priced into the market,” said Tetsu Emori, a fund manager at Astmax Co. in Tokyo, Japan’s biggest commodities asset manager. “The oil price will head down and test the $40 level again whatever OPEC says or whatever agreements they make.”

Crude oil for January delivery was at $44.64 a barrel, up 13 cents, in after-hours electronic trading on the New York Mercantile Exchange at 1:24 p.m. Singapore time. The contract earlier rose as much as 1.2 percent to $45.02 a barrel. The price has tumbled 70 percent from a record $147.27 on July 11. Yesterday, oil fell $1.77 to $44.51 a barrel.

For those of us in low-gas tax states, gas is going to stay around a buck and a half for while longer. And if oil breaks the $40/bbl mark, good. The Saudi oil ticks think that $75/bbl is a “fair” price? Tough. I didn’t hear them talk about increasing input when oil was $147/bbl. Funny, that.

Actually, the current prices are fair. They’re known as “fair market value,” and it’s what happens when the market determines the price, rather than a bunch of billionaire oil ticks whose only reason for having that oil money is the luck of being on top of some of the world’s largest oil reserves. Sure hope you boys are diversifying, because someone, and very soon, is going to develop an alternate fuel that’s going to cause the bottom to drop out of the oil market. At least, that’s my hope.