CHESSNOID

It is hard to believe that oil was up to $147 a barrel and now it is close to $43 a barrel.  Many experts are now predicting the price to fall to $30 a barrel.  Financial Times:

Oil prices will fall to $30 a barrel in the next three months, Goldman Sachs said yesterday, as it lowered its 2009 forecast for oil prices to $45 a barrel, down from a previous prediction of $80 a barrel.

The forecast is an awkward U-turn for a bank that, until recently, had been one of the big bulls of the oil market and only a few months ago warned about the danger of a “super-spike” to $200 a barrel.

In the broader commodities asset class, the bank was also bearish, telling clients to underweight commodities, particularly relative to equities.

“Commodities will be one of the last asset classes to perform in a recovery,” the bank said.

Goldman said that, with the recession expected to take on “an increasingly global character as we move into 2009″, demand for oil will contract next year for the first time in 25 years.

“The collapse in world oil demand in the fourth quarter of 2008 as the global credit crunch intensified now threatens to push oil prices below $40 a barrel in the near term,” said Goldman’s commodities research team, led by Jeffrey Currie.

I just purchased gasoline at $1.79 a gallon last week. Today when I drove by the gas station, unleaded gas was priced at $1.63 a gallon. It is literally falling everyday now. It looks like we may have gas prices of the pre-Bush White House era. Now that is a welcome relief. Let’s hope gas falls down to $1.10 a gallon.

This lower price in gasoline will hopefully translate to lower prices of goods and services in the near and far future. That may actually help stimulate the economy in the right direction.