Are you ready for lower prices at the pump?
On Monday, Brent crude was down more than 4% to as low as $66.12 a barrel, its lowest level since 2009.
Meanwhile, West Texas Intermediate crude, the US benchmark, was also extending losses from earlier on Monday, losing more than 3% and cracking $64 a barrel for the first time since 2009.
WTI fell as low as $63.29 a barrel.
In plain English, that means the commodity used in refineries to make gasoline – crude oil – is being pumped out of the ground at a rate that makes it considerably less rare, and therefore cheaper at a wholesale rate. Â The increase in production is largely due to the American Shale Revolution, which is pumping a lot more crude oil onto the market than the traditional suppliers would like. Â This is not making OPEC or the established oil industry happy including a lot of fund managers who manage wealth, but it is exposing how the price of gasoline and heating oil has been manipulated by restricting oil production both domestically and abroad.
Why this is important at this time, is that one of the downward drivers of the economy has been high energy costs – including crude oil progeny gasoline and heating oil. Â With more of the raw materials on the market, more can be sold cheaper just to keep inventories low. Â For regular, everyday Americans, this means less spent on everyday utilities and more cash freed up to spend on other stuff. Â (Trickle, trickle, trickle down.)
Contrary to the dark clouds the financial world are casting on this development, for Americans, this is the best news of the year.