Oil Prices Hovering At 3-Year Low

Oil prices dipped below $50 a barrel Thursday. That's a nearly two-thirds drop from the record high of more than $147 in July. While that may sound like pleasant news, the low price is actually a symptom of a weak economy. Since many expect the economy to drag for a year or more, oil prices likely will stay low.

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Oil is also trading at less than half the price it commanded just a few months ago. It is now below $50 per barrel. And we have more this morning from NPR's Jeff Brady.

JEFF BRADY: University of Houston Finance Professor Craig Pirrong says oil prices are hostage to a really crummy economy.

Dr. CRAIG PIRRONG (Energy Markets Director, Global Energy Management Institute, University of Houston): Actually, economy is weakening rapidly, moving into recession if we're lucky, and if not, something worse. And that's reducing demand: reduced demand, lower prices.

BRADY: The Federal Highway Administration says Americans drove 10.7 billion fewer miles in September compared to the same period last year. There have been 11 straight months of similar declines. Since many expect the economy to drag for a year or more, oil prices likely will stay low. Philip Verleger is an oil and gas industry economist at the University of Calgary.

Dr. PHILIP VERLEGER (Strategy and International Management, University of Calgary): You know, if prices get down another $10 or $15 a barrel, stay, say, in the mid-30s for a year, we will fully offset the drag on the world economy that came when prices got up to $140 this summer. BRADY: Here's the one piece of good news out of all of this: lower gasoline prices. Stations in many states already have dropped their prices below $2 a gallon. Jeff Brady, NPR News, Washington.

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