No sooner had all those headlines proclaimed a summer sale on gasoline, then the folks at OPEC took a big step to push those prices back up.
In an aggressive move, OPEC announced that it would cut production by 1 million barrels a day. With global demand for oil plunging due to the sick economy, the cartel says it's cutting output to keep prices stable.
But predictably, and disturbingly, oil prices have already started to gush in anticipation of the OPEC, rising 8% or about 2 dollars a barrel since Thursday — 51 cents alone on Wednesday.
It's a rise that many think has Alan Greenspan seeing red.
The Fed Chairman has been counting on falling oil prices to help turbo-charge his interest rate cutting campaign. In fact, Greenspan told Congress on Tuesday that the drop in oil prices this spring would jump-start economic demand and corporate profit margins in the second 1/2 of the year.
Now with oil prices rising, he may have to get a new crystal ball.
Of course with so many clouds, there is always a silver lining. And in this case the winners could be investors in the oil and oil service stocks.
Oil stocks rallied Wednesday on the OPEC news and that is good news for investors looking for some sort of safe haven in this challenging market.
After a great 12 months, oil stocks have been in the tank since spring: Exxon Mobil (XOM) down 10%; Chevron (CHV) down 12% and Schlumberger (SLB) down 21% from the spring highs.
But that's little comfort for the rest of us who may have to suffer through another long winter with sky high oil prices.
In fact, if prices crack the $30 dollar a barrel level again, economists estimate it could shave 1% off of GDP, a cut this stagnant economy really can't afford to take.