Today's terror alert brings a temporary reprieve from rising oil prices
Oil prices were slumping after British authorities foiled a plot to bomb several airplanes traveling between the U.S. and Great Britain. Airlines canceled flights, leading some traders to worry the move would cut air travel and drag down demand for crude and jet fuel.
Light sweet crude was last dipping $1.95 to $74.40 a barrel, its lowest level in over a week. Energy stocks were following crude lower, with the Amex Oil Index and the Philadelphia Oil Service Index off by more than 1%.
Traders, however, were predicting the move down in oil futures would likely be short-lived because demand for crude remains high.
"Will this have a long-term effect? Probably not, unless the terrorists are successful," said Phil Flynn, an energy analyst with Alaron Trading in Chicago. "The sad truth is the world has become accustomed to these threats. If the market senses the attack has been thwarted, then they'll assume the risk of an attack has been diminished."
Crude futures have been whipsawed this week on a raft of supply fears, with BP's shutdown of the country's largest oil field garnering much of the attention.
Yes, if we had a real terrorist attack with a massive body count and some martial law to follow it up with, I imagine the price of oil and gasoline might even come down to pre-Iraq War levels... perhaps Bush should call his handler within Saudi GID and see if they might cook something like that up for us. I'm joking, of course. But that line by the Alaron Trading agent about it not being permanent unless the terrorists are successful is a pretty morbid observation, the kind of observation only an economist, or a terrorist, could make.