Oil Price Falls Due to Fear of Falling Over ‘Fiscal Cliff”
CHICOPEE, Mass. (WGGB) — Taking the good with bad. If Congress can’t agree on how to reduce the nation’s debt by January 2, there will be automatic tax hikes and huge spending cuts.
However, falling over the ‘fiscal cliff’ could bring down oil prices.
When it comes to lowering oil prices, it’s a perfect combination, low demand and high supply.
Traders pushed the price of a barrel of oil below $86 dollars Monday. Analysts say it was over fear the country would go over the fiscal cliff, the economy would slow down and demand would fall.
Then, the International Energy Agency in its 2012 World Energy Outlook predicted high supply. It said the U.S. will continue to increase its oil production and that by 2017, it will be the largest producer.
That would put Saudi Arabia at number two, a country which is already showing signs of weakened capacity.
“They’re flushing their wells with salt water which is usually a sign that they may be coming to somewhat of an end to what they have,” said Marty Topor, owner of Central Oil in Chicopee. “It would be great news for us. However, we still have to remember we need a refinery to process this stuff.”
President Barack Obama signed off in October on the first new refinery in 30 years. Republicans want more, though.