OIL PRICES HAVE HISTORIC DROP

The price of oil recorded its largest price drop ever. Since early this week the price has dropped about seventeen dollars closing today at $128.88 (per Bloomberg)

Yes, Tom Kloz an oil industry analyst, said "We're going to see some relief from that relentless march higher."

But don't anyone take solace yet. The price of oil is extremely volatile. A little geopolitical unrest anywhere in the Middle East or Africa or South America and - BOOM - up it goes again.

Also Hurricane season is just getting cranked up. The high part of it is yet to come. All that needs to happen is for one or two powerful ones to hit the Gulf Coast and likewise - BOOM - up it goes again.

One other factor that still isn't getting much attention (and it really should) is the fact the U.S. continues to use more oil than it produces AND imports. Despite the fact that people are driving less, there's still has been no substantial drop in consumption since the high prices hit only - about 2-4%. That's a piddle in bucket compared to what's still being used by most Americans (about 21,000,000 barrels per day).

Demand cannot continue to outstrip supply without causing high prices to visit Americans yet again.

Further, there's less and less each day to be taken out of the ground. The supply problem isn't going to go away. It's here to stay. If American insist on returning to the oil well again and again to fill up - they'll come to it one day (soon) to find it empty.

So, I guess for Ma and Pa SUV and Hummer owner - it's break time for now. You might be enjoying gasoline probably at around at $2.859 per gallon soon - maybe even a little lower. But don't re-crank up those vacation plans to take the family back on the road yet. If you commit yourself to head out for the Grand Tetons or Myrtle Beach in August you might find yourself paying a price you didn't expect to pay to get there and back.

Americans have changed their driving ways in the last two or three months - that's true. It's got the two of the big three moving toward dumping production of the SUV's and big ass trucks. Honda and Toyota can't keep the fuel sippers on the floor.

But the orientation is still deeply, deeply, deeply, deeply geared to preserving the car culture. What that means, in my opinion, is that the drop in fuel consumption is motivated by really nothing more than a "gut-it-out-and-pray-to-God-prices-go-down" attitude. Until THAT attitude changes nothing, in the end, is ever going to get better - indeed it will continue to worsen until it becomes impossible for most Americans to live their lives any other way but crawling, biting and scratching out their existences each day. And this won't take 30 or 40 years to happen either. More like 5 or 10.

It means - if the American people don't want to tumble down the hill and become a third world nation in a decade (or less) - life changes must be made now.

So, don't let oil's price slide put you on your own slippery slope into oblivion.