Why Oil Really Fell Today--and Could Keep Falling Oil slipped below $120 at one point today and now overall is down nearly 20 percent from its July high of near $150. But I don't think the drop had much to do with the usual suspects--a weak consumer spending report, less risk that Tropical Storm Edouard will smack the Gulf Coast--which will surely be mentioned in the financial pages tomorrow. I think the drop had everything to do with reports this weekend that MIT chemist Daniel Nocera seems to have discovered a cheap--by a factor of 1,000--and easy way to separate hydrogen from water.
Oil slipped below $120 at one point today and now overall is down nearly 20 percent from its July high of near $150. But I don't think the drop had much to do with the usual suspects--a weak consumer spending report, less risk that Tropical Storm Edouard will smack the Gulf Coast--which will surely be mentioned in the financial pages tomorrow.
I think the drop had everything to do with reports this weekend that MIT chemist Daniel Nocera seems to have discovered a cheap--by a factor of 1,000--and easy way to separate hydrogen from water.
This theory brought to you by a blogger who see the future and it is "heroic capitalism..."
Again.
A lower price for a 'backstop technology' (e.g. hydrogen fuel cells to replace oil) to a resource can reduce the 'scarcity rent' incorporated in the current price. However, this only functions through an increase in current supply.
IOW: the futures market would be expecting supply to increase in the near future. I doubt that.
Decreased demand is probably the only reason.
