A wealthy Saudi businessman, Alwaleed bin Talal, boldly stated to Bloomberg News that the world will never again see oil that costs $100 per barrel. For Mainers, that’s probably welcome news since there’s a direct relationship between the price of crude and the cost of refined products such as gasoline, diesel and home heating oil.

The explanation for this opinion is telling because he’s knowledgeable about what’s happening in today’s world including the global oil industry. We can hope the Saudi reading of tea leaves will continue for some time and may be true.

For all the environmental concerns expressed about hydraulic fracking to reach previously inaccessible oil deposits, it’s this development and the United States becoming a major oil producer, as well as a couple of other factors, that have set the stage for the recent price drop.

First, worldwide business is slowing down and with it the need for oil. Far East economies, especially China, are growing at about half of historical rates. The United States doesn’t need the oil; stockpiles are at record levels. And, OPEC has decided to keep pumping at levels that produce a supply glut. Everyone else dares not to slow down and lose business.

There will be winners and losers in the coming months and years until someone blinks and the game of chicken will end. Enjoy gas pricing for now; it won’t last.

F. Gerard Nault

Windsor

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