The move by Obama and the IEA to lower gas prices and oil prices by tapping into vast crude reserves sent a ripple in the markets today. Perhaps a paradox occurred and the global economic situation from the Libyan crisis is dire indeed.
The International Energy Agency in partnership with President Obama to avert a wayward global economic crisis, is releasing 60 million barrels of crude oil. The United States accounts for half of the infusion.
The rationale behind the IEA's plan is the release will drive down rising oil and gas prices while easing the so-called "pain at the pump."
With fuel prices testing the $4.00 per gallon mark several times in recent history, the global government effort is meant to increase consumer confidence amid the ongoing Middle Eastern conflict with Libya.
Will The International Energy Agency's emergency tapping into reserves amount to lower prices in oil and gas?
Some analysts insist the radical move will in fact stabilize the markets. However, others are not so convinced.
Portfolio manager James Dailey is more concerned about the root cause of the global crisis, not just a temporary fix. "The stock market has come to a realization that the slowdown is worse than expected, that we are not just in a soft patch but a long-term slowdown," he said in an interview.
The markets responded unfavorably on the news about the IEA action to lower oil and gas prices. The Dow Jones plunged 73.83 points to 12,035.84. That represents a 0.61 percent decline.
While oil and crude futures fell as well, once the market realizes the economic outlook is bleaker than the forecast, an oil and gas tsunami could be well on its way.
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Image: Wikimedia Commons
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Comments: 3
It amuses me that the Libya situation is messing up the oil pricing. Why? Because I have seen so many clueless bloggers saying that Obama is engaged in an adventure to steal oil. In reality, his moving against Kadhafi inevitably forces us to pay an economic price by keeping Libyan oil off the market. I'm waiting for the bloggers to adjust their argument to: "Let Kadhafi stay in power so we can have cheaper oil!" That would make sense from sheer self interest. It would of course be harshly selfish and uninterested in human rights, but you can't have everything.