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Slippery Times Ahead
By MARYANN BIRD
If the U.S. recession proves to be as short-lived as some investors hope, they can thank, in part, the cheap price of oil. Even as unemployment has ticked up, low prices at the pump have kept an suv-driving nation on the move. Can this last?
Demand for crude has been held down so far by mild winter weather and the shock of Sept. 11, which has forced many businesses — particularly airlines — to cut back consumption.
An improving economy would normally help prop up prices, but crude could fall even further from its current $18 a barrel this year as OPEC’s grip on production weakens. The cartel has scrapped its target price of around $25 a barrel, settling — for now — for market stability.
Last December, OPEC agreed to production cuts to bolster prices, but was only able to arm-twist a small reduction from nonmembers, including Russia and Norway.
With its market share under threat, OPEC will have some tough calls to make on production and price-propping when it meets in March. On second thought ... A fresh conflict in the Middle East could temporarily disrupt supplies, forcing up prices.
Argentina Alone
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