NEW YORK (TheStreet) -- If lower pump prices and energy costs sound appealing you're in luck. Long-term energy prices should continue to fall. More important, natural gas prices are so incredibly low, that even with falling oil prices, natural gas is still an exceptionally attractive alternative.
A perfect sunny day in energy is developing for consumers. Domestic energy production output is climbing, dirt-cheap natural gas is available as far as the eye can see, utilization of natural gas is growing, economic slowdowns in economic activity have taken the wind out of inflation fears, and fewer miles driven suggest the further out we examine the lower the cost of energy. (Read my Natural Gas Will Dictate Oil Prices, Not Iranian Sanctions or OPEC article.)
Saudi Arabia is pumping and exporting near its capacity in the neighborhood of 10 million barrels a day. OPEC as a whole recently agreed to maintain 30 million barrels a day; however, it's widely known what members of OPEC agree to and what they actually produce is not always the same.
Lower oil prices are vulnerable to lower supplies. Those arguing a reduction in Saudi exports may result in a snap back to $100 have a limited point. Historically, even speculation that Saudi production may decline is enough to firm up prices. Saudi Arabia's influence on prices hasn't diminished significantly; however, what may actually change is the demand reaction to lower output/higher prices.Europe, already hanging by a thin economic thread, hasn't taken part in falling energy price party like America. With a falling euro and oil priced in dollars, energy prices are relatively much higher for manufacturers and gas stations alike. The recent drop in valuation of the euro compared to the dollar keeps demand tempered. The Indian rupee has fallen against the dollar even more. (Read my EU's Iran Sanctions More Bark Than Bite article.) The rupee has reached new lows and India imports over 75% of its oil needs. Demand destruction is not far away for India or Europe. As a result, the ability for OPEC to drive oil prices higher may still be available, however, in doing so OPEC understands the wheels may come of the cart when Europe, India, and other oil importers double dip into recession or worse.
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