A Repeat?

While I was surfing the internet tonight, I found a very interesting article from the New York Times. The past week I have noticed how gas prices have been dropping and I have been very curious why that is. When I was scanning the home page of the Times website, one of the headlines was Oil Prices Fall Below $90 a Barrel. I even though gas and oil prices aren’t directly related, generally when one goes down, so does the other. My curiosity made me open the article and what I read was very interesting. The reason for the low oil prices was because of the economic slowdown. With the bad economy, buyers are being more cautious of their money spending, causing the demand for oil to go down. Only 2 months ago oil prices were at a record high or $147.27 a barrel, and analysts had predicted it only to keep going up. It’s interesting that a drop in prices is happening right now, because oil industries are still recovering from hurricane Ike. Experts say if the damage from the hurricane had happened in a time of economic boom, the prices would have sky rocketed. But as long as the demand stays low, so will the prices.
The past week in class, the topic has been the great depression. We made a web of why the great depression was started, and one of the branches was not as large of a demand in goods. After the stock markets crashed, people became more cautious of how they spent money. This caused less of a demand for products, putting many companies out of business. This is similar why oil prices have dropped recently. After the stock market fell the most points since the great depression, many people became cautious of their money. This has flattened out the demand for oil, forcing oil companies to lower the price. I thought it was interesting, and kind of scary to see the connection between the start of the great depression and now; after the stock market drops significantly, people become cautious with their money and the demand for consumer goods drops too. It will be interesting to see how this affects other companies.