I knew it! Oil breaks $115 and the doom-mongers are already coming out.

Now that supplies are rising, speculators are leaving the market, and consumers are driving less, the gloomers are seeing storm clouds around this silver lining.

The theory is that the only reason oil prices are falling is because global demand is falling. And that’s because the world is entering a recession. But there are a lot of reasons why demand is down. Some is technological, as people drive smaller cars. Part is economic, as the developing economies remove their subsidies. And part is also behavioral, as people drive less.

But it’s also about supply. For five years oil has been on a tear. New college grads with degrees in petroleum engineering can get employment offers in six figures. And people who bought tankers full of oil and had them sail slowly into port are now in a rush to cash in.

Twenty years ago Time magazine ran an issue that said that cheap oil was both good and bad news. With the US importing about two thirds of its total oil needs, lower prices are good.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-03T20:46:45+00:00 August 11th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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