John Howell Sr. Editorial 1/9/2015

Published 12:00 am Friday, January 9, 2015

Yo-yo on the downspin as we ride now, pay later

The downspin of the fuel price yo-yo favors us now as we enjoy the lowest gasoline prices we’ve seen in years. Just don’t think it’s permanent.

As best I understand it, the Saudis have decided not to curtail their production in the face of falling prices for two reasons. Most important to them is that their Shiite rivals in Iran also produce oil, but at a higher cost.

So the lower market price for oil hurts the Iranians more than the Saudis who seem to be able produce their fine, light crude by simply sticking a hole in the sand.

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Domestic producers in the U.S. face even higher production costs than those in Iran, so the Saudis’ decision not to cut back their oil production will hurt our domestic production as well. As the present boom in Iran and the U.S. cools in response to the lower fuel prices we are enjoying, production levels will fall. Domestic producers won’t continue if they don’t see a profit.

With oil producers in Iran, the U. S. and elsewhere cutting back, the supply of oil on the world’s market will shrink and prices will rise once again, just like the yo-yo.

We can’t get our heads around the concept that there is no such thing as cheap energy. It’s “Pay me now, or pay me later,” but either way we are going to pay.