Hurricane Ike, the Global Economy, and the Price of Oil

Clifford, Catherine. "Oil tumbles below $96 after Ike passes" http://money.cnn.com/2008/09/15/markets/oil/index.htm

After hurricane Ike moved out of the Gulf of Mexico, the price of oil fell to under $100 a barrel. The damage caused by Ike was much less than what was expected, causing the price to drop about $5. The oil refineries in the gulf were still able to function unlike after Hurricane Katrina. The damage caused by the hurricane was compared to Katrina. Clifford writes, "Refineries are especially vulnerable to flooding, and after Hurricane Katrina hit the Gulf in 2005, refineries were out for 6 to 9 months" (Clifford). Hurricane Ike was much less. Also, because the economy has been slowing down and the price of oil has been so high, the demand for oil has also dropped. Clifford also tells us, "As the U.S. and global economies have buckled under credit pressures, demand for energy has fallen off" (Clifford). Not just the US, but the entire world economy has slowed down, so the producers of oil have less demand for their product. That, combined with the uncertainty of the stock market, makes people less likely to spend money in areas that they don't absolutely have to spend it in. The combined forces of hurricane Ike and the failing economy have caused the price of a barrel of oil to drop significantly in the last few days.