Yeah, I fully expect to see oil go below $20, expecially after the shakeout and bankruptcies that allow pumping at lower prices. And it will be good for everyone except oil companies and oil kleptocracies. Other than California, look for gas below two bucks indefinitely.
[Update a few minuts later]
OK, well, this isn’t as encouraging:
During the 2007 crisis, central banks the world over made a coordinated effort that pumped large amounts of liquidity into the system, easing the pressure. However, since 2009, these same central banks have followed an easy monetary policy, inflating balance sheets to scary levels, as shown in the chart above. They will find it difficult to handle any future crises caused by low oil prices. They are now out of ammunition.
The current oil crisis will see regime changes in strategic places, and a currency crisis is in the offing. The world is staring at deflation. And while the 2007 crisis started in the US and then spread around the world, today’s crisis is affecting all major nations simultaneously. All are struggling due to low oil prices—some directly because of lower revenues, and others because of deflationary pressure.
The next crisis will be larger and longer and it will hurt a lot more than the last one. The windfall at the gas pump is a dark harbinger.
At least we’ll be able to afford to fill the tank, if we have jobs.