Crude prices plummeted more than 40% from their multiyear peak in October and hit a low on Christmas Eve.
The decline in prices was further solidified by the government shutdown, trade tensions with China, and fears that a global economic slowdown would weaken the demand for oil and other commodities. With the government shutdown now apparently over for months to come and other factors appearing a bit less negative, the price had continued to climb.
Then came comments on Thursday from European Central Bank President Mario Draghi that the European economy was in "a period of continued weakness and pervasive uncertainty."
Added to that was a report Friday that China's February exports fell 21 percent from a year earlier, representing the biggest drop in three years. Chinese imports, the report said, also declined--by 5.2 percent.
If this were the 1980s, the price of oil would be skyrocketing--thanks to the cuts in production by Saudi Arabia, the partial absence of crude from Iran thanks to US sanctions and from Venezuela due to the revolution that is happening in that country. But US crude oil production has increased by more than 2 million barrels per day since early 2018 to an unprecedented 12.1 million bpd. That makes America the world's biggest producer, ahead of Russia and Saudi Arabia.
US crude exports have also been setting records, reaching 3.6 million bpd in February — more than the production of OPEC members such as the United Arab Emirates, Kuwait and Iran. The US will soon export more oil and than Saudi Arabia.
While America isn't feeling it--at least not yet--the world economy is slowing. The slowdown in economic growth is likely to dent fuel demand and pressure prices at some point.
America will continue to produce more oil--it's expected that production will increase by another million barrels per day by year's end. That may well save the US economy from the problems the rest of the world is already beginning to experience. One expert, talking about the growing US trade deficit, commented, "That will likely begin to change, and the US foreign debt may be quickly paid thanks to the rise of American oil and gas exports."
As we've reported before, we still expect gas prices to increase to $2.50 - $2.75 a gallon by May. That's still less than where they were last May when they ended the month just short of $3 a gallon. It's still our opinion that the price won't eclipse the $3 mark this year. So far, the price is up by about 20% since Christmas and we expect it to edge upward a bit more as Summer approaches, but the downturn in crude prices on Friday and the increasing US production will likely stabilize the price--it appears now likely less than what we had previously expected.
In other business news
You've no doubt seen the work progressing on the two new restaurants that will be located on East Main Street in Lincolnton where the Ford dealership operated for many years. Captain D's and Church's Chicken are still months away, of course, but work is closer to completion on the two new stores that will occupy the former Bi-Lo location on North Generals Boulevard. Marshalls and Burkes Outlet will open there. Japan, which used to operate on the front side of the same shopping center, has enjoyed its move to its new location on the other side of Generals Boulevard. Their business has increased markedly since the move.
In East Lincoln, work continues on the Sports Page's new location across the road from their current spot. When they move, Fresh Chef Kitchen, a local restaurant chain with four locations in the Charlotte area including Cornelius, will open shortly after the Sports Page relocates.
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