Crude oil crashed to $84 per barrel prices on October 10 for the first time since the 2012 Olympics held in London. In case you drive a car or truck, chances are that you are already cheering the latest development. Unfortunately, it will not bring in any joy.

No reason for joy

When the price of oil gets lower, it brings with it a few quite scary developments across the world, particularly in Europe. The world is certainly not ready for another recession. The plunge in oil prices is frightening investors, making fuel pricesgo turbulent on the Wall Street.

The present situation reminds everybody that a wish granted may always be not for the better. It is true that businesses and consumers will profit from lower prices at pump. However, the lower price is driven in part by a number of negative factors.

According to Joe Saluzzi of Themis Trading, energy showed stellar performance during the January to June period. At present, the same is taking the wind out of the market sail. Saluzzi co-heads trading at Thermis.

Contributing factors

A mix of factors has contributed to pry open a trapdoor underneath the oil price. The foremost factor is the increasing worry concerning the anemic economy of Europe and ability of European Central Bank and Super Mario to continue bolstering it up. Recession is staring Germany in the face. German stock markets dipped to one-year lows during the second week of October.

The factors of Europe’s decrease economic activity along with China’s continued sluggishness means that commodities will be less in demand, specially oil. It automatically means that oil prices will fall.

The restrengthening American dollar has also hurt oil. The greenback prices are normally inversely proportionate to the price of commodities. The US dollar is cruising as the American economy outperforms its peer group of nations.

The other causal factor of cheaper energy prices is the phenomenon of extra supplies. American oil production, which is fed by shale’s rapidly increasing popularity, is reaching sky high. The domestic output has increased to the tune of 70 percent from 2008, as per the Energy Information Administration. According to Marc Chandler of Brown Brothers Harriman, the increase in US oil production is a veritable “supply side shock”. Chandler is the head of the currency strategy at the company.