Falling Oil Prices Defy Predictions. But What About the Next Chapter?

When oil prices fall, many costs for industry and agriculture, including chemicals and fertilizer, generally follow. And shipping becomes more economical. But when they rise sharply, as they did in 2008 and in the 1970s, they tend to increase other prices and suppress the overall economy. And political fallout often ensues.

Predicting energy prices has always been a fool’s game because there are so many factors, including the expectations of traders who buy and sell fuel, the political fortunes of unstable producing countries like Venezuela, Nigeria and Libya, and the investment decisions of state and private oil company executives.

Today those complexities are particularly difficult to assess.

“(When) Will Oil Bulls Start Revising Forecasts Down?” was the title of a recent Citigroup commodities report. With a global recession “on the horizon,” it said, “which is more likely, a robust hurricane season, seeing prices skyrocketing? A return of Iranian barrels? Or a…

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This article was written by Clifford Krauss and originally published on www.nytimes.com