Falling Oil Prices Signs Of Bigger Problems?

Be it signs of decreasing global demand of crude oil or a slowing world economy, but oil fell to its lowest price at $118 a barrel on Tuesday, after record prices of more than $147 per barrel were seen on July 11, according to Bloomberg.com.

Two theories exist to explain the declining price of crude oil. One says that world demand is decreasing because people have changed their behavior to reduce consumption by driving less and purchasing fuel efficient cars. This is great as it reduces the need for foreign energy sources and promotes sovereignty and independence.

The second explanation is bleaker. It attributes falling oil prices to a shrinking world economy and says oil prices were so extreme that global economies will constrict. Many of these theories are true. Americans continue to witness economic hardships and feel the tightening of a slowing economy through an inability to consume, pay the mortgage and save for the future.

Source Bloomberg.com:

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