In May 2007, with gas prices approaching $3 per gallon, energy costs were responsible for the approaching recession; the cut back on spending was explained as consumers “battered by surging gasoline prices”.

But in December 2009, with gas as $1.65 per gallon, we reached prices below 2004 levels, when the average was $1.85. Still, consumers keep cutting back on spending: November retail numbers show a drop of 7.4% (±0.7%) compared to November 2007. That was driven mostly by auto industry collapse, but retail dropped 8% from the past year.

November 2008 retail sales

So, were gas prices really causing the recession, as CBS John Roberts menacingly warned us? Apparently not.

Those very high gas prices season at least lead us to reduce the stratospheric domestic consumption by 1% on a year-to-year basis. At the same time put world oil pricing in the frontline. Oil, that in July went for $147 a barrel, is now priced at less then $40 a barrel.

But the Christian Science Monitor, which in October decided to go online-only after one century of print, brings us this pearl:

Still, private forecasters are expecting a wide range in oil prices next year. “If things go really bad, you could see oil prices dropping to $10 to $11 a barrel,” says Phil Flynn, a vice president at Alaron Trading Corp. in Chicago. “It’s more likely to fall to $25 a barrel on the low side and by the end of the year be back to the $70-a-barrel level.”

Which is to say, private forecasters have no idea of what is going to happen.

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