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Oil Snaps Back As Markets Sense Post-Election Bounce

Signs of recovery may also lead to spike in gas prices

November 4, 2008

• Feds Consider Gas Tax Hike Even With Low Prices • Oil Rises But Gas Keeps Sinking • Cheap Gas Prices Provide Holiday Cheer • Falling Gas Prices Finally Level Off • Gas Prices Fall Nearly 12 Cents in a Week • Gas Prices at 2005 Levels • OPEC Unable to Stop Gas Prices' Slide • Give Thanks for Falling Gas Prices • Gas Prices Fall Below $2 a Gallon • Oil and Gas Supplies Rise • Gas Prices Accelerate Their Decline • Gasoline Prices Down 19 Cents in a Week • Charlotte Gas Stations Make Refunds to Consumers • Oil Snaps Back As Markets Sense Post-Election Bounce • Gas Prices Settle Still Lower for Weekend • Gasoline Prices Keep Falling • Gas Below $3 Nationwide • Average Gas Price Down to Nearly $3 a Gallon • Gas Prices Drop, Along With Oil • Gas Prices Head Lower as Economy Slows • Gas Price Declines for 9 Days • Gas Prices Continue Downward Trend • Oil Prices Surge By Record $25 a Barrel • Gas Prices Drop for 5 Days • Price-Gouging Probes Spread to 6 States • Investigations of $5 Gas in North Carolina, Florida, and Virginia • Shortages, Price Hikes Follow Ike in Southeast • States Investigate Gasoline Price Gouging Claims • Pumping More U.S. Oil Won't Lower Prices, Consumer Group Says • Oil Prices Fall, Gas Prices Surge • Gas Prices Slide 8 Percent from Record --- • More ...

The economy may not be in such dire shape after all. That's the good news.

The bad news? A faster than expected return to economic growth will likely reverse oil's dramatic decline, as rising demand pushes prices upward again. That means those falling gasoline prices consumers have enjoyed lately could quickly become a thing of the past.

With the optimism that any new administration brings, Wall Street has already started an impressive rally and Tuesday, oil prices jumped on the bandwagon. The price of crude rose more than $7 a barrel to $71.14 a barrel around Noon on the New York Mercantile Exchange.

Analysts said oil also got a boost from the falling dollar, which fell three percent against the euro. Commodity prices were also sharply higher.

Gasoline prices remain at the lowest levels in well over a year. On Tuesday the nationwide average of unleaded regular was $2.391 a gallon, according to AAA. That's down about 11 cents since Friday and is down more than 60 cents a gallon a year ago.

Oil prices have fallen rapidly, in concert with oil prices, over the last six weeks. The decline was set off in large part by the credit crisis on Wall Street, and warnings of an impending recession on Main Street.

Prices had been steadily falling from their mid-July highs because of declining demand. Oil traders began selling their positions in mass when the financial meltdown set off alarm over an impending global recession, caused by a lack of credit.

Since then Western government have worked in concert to lower interest rates and inject liquidity into the financial system. Also, the real estate market has begun showing signs of life after prices have fallen into a range attractive to both speculators and home buyers.

Some analysts have predicted a tough winter and spring, but call for a slow recovery beginning next summer.

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