The Story Is Still: OIL

Even with the fall of Lehman Brothers and BOA’s fortuitous takeover of Merrill, the story is still OIL.

Oil dropped below $95 per barrel for a while this morning, and $100 proved not to be any sort of psychological floor for that market.

The real question is:  When will gas prices catch up to the decline in oil prices?  Oil is now down over 35% off its highs of just a few weeks ago.  While there’s not a direct correlation between oil prices and gas prices, the problem for consumers is that the disparity in that relationship ALWAYS benefits gas producers, and continues to do so right now.

The stock market will probably have a bad day today, and that’s ok.  We need to experience failure for major investment firms who made bad decisions, and Lehman certainly fits that bill.  But if oil continues to decline, the economy in the United States will be on increasingly sound footing anyway.