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Are We Over The Oil Hump?

One of the emerging bit of conventional wisdom on the right, it seems, is that oil prices are now falling all because Republicans are simply talking about drilling for oil off shore. Oh, and also because President Bush repealed the executive order banning offshore drilling—even though the congressional ban is still in place (and even though it's clear that Oregon, Washington, and California aren't going to open up their coastal waters for oil exploration no matter what Congress does).

Anyway, Jad Mouawad's piece in The New York Times today neglects to mention this theory, but does try to get at some of the big reasons why oil has fallen more than $23 per barrel since July. And, again, it's the basic boring stuff: Demand has slipped faster than anyone thought possible—especially in the United States, where people have been cutting back on driving pretty dramatically—and with the U.S. economy still squishy, most traders think demand is going to skid down even further. Some experts also point to the diplomatic feelers the Bush administration is now putting out toward Iran, which may have helped "deflate some of the geopolitical risk premium that had been built into high oil prices."

I wouldn't venture a guess on where things go from here, and many analysts are sounding cautious. Another flare-up in the Middle East could, obviously, send oil prices right back up in the troposphere. Conversely, China, India, Brazil could start growing more sluggishly. One remarkable bit is how quickly driving in the United States has tapered off over the past year, even though many people don't have great transit options. (Technically, about 57 million households have both cars and access to public transportation, but that's "technically," and a bus that swings through the neighborhood on an irregular schedule isn't terribly useful.) It'd be swell to see what a concerted effort to promote public transit and other alternatives to fossil fuels could do—because, in the long run, the oil's certainly not getting any more plentiful.

--Bradford Plumer