OUR OPINION: Hold on to your wallets
Just when we thought that the per-barrel price of crude oil had begun to level out, the game has again changed.
Monday, oil prices briefly shot up more than $25 a barrel, setting a new record for the biggest one-day gain in market history. The spike is attributed to unease about the government’s planned $700 billion bailout plan to help fix a damaged national economy.
The value of a barrel of light, sweet crude oil for October delivery hit the $130 mark, $25.45 higher than at the start of the day, on the New York Mercantile Exchange before decreasing back to $120.92, for an ending increase of $16.37.
The bailout announcement caused the value of the dollar to tumble dramatically and spurred investors to buy safe-haven assets. An expiring crude contract added fuel to the frenzied rally.
Another aspect was the expiration of an oil contract today, which naturally brings with it fear and an increase in value.
In Louisiana, we are lucky in that we do not see the drastically high oil prices that other states see. That is in part because of our abundance of oil production and closeness to offshore oil operations, cutting the cost of delivery. But, even that thought doesn’t comfort those who are breaking the bank just to keep themselves moving.
You can believe this will not be the only shake-up Wall Street will see in the coming weeks. With mortgage companies going under faster than Michael Phelps in an Olympic pool and many comparing the bailout to giving a blank check to Treasury Secretary Henry Paulson to buy troubled assets from financial institutions, more valleys than peaks could be on the way for John Q. Public.