After months of pressure at the pump, the cost of oil continues to ease, thanks to lower demand – especially in the US – despite concerns like the fresh conflict between Russian and European Georgia. prices are down around $115.20 per gallon and seem to still be headed downward in early trading.
While many analysts are mystified by oil’s drop, the truth is that several months of unrelenting price increases had perched oil at an unmaintainable high benchmark, and all this is, really, is a market correction in the price.
Given the actual market dynamics, oil should be somewhere around $70-$80 per barrel; so although it may take a while, it would not be surprising to see oil continue to fall another $35-$45 per barrel before leveling off, though it may take three or four months to get there.
Right in time for the US elections? No, I doubt this is a big oil conspiracy; it’s more like a colon cleanse for an over-inflated market and where prices go after the US election will still depend more on market dynamics than election results.
Of course, an Obama victory would mean that any easing of prices at the pump could be replaced by a higher federal fuel tax – so watch out.