Three short months ago, with a 48-gallon barrel of oil having dropped from $147 down to $130, I opined that it would probably fall down to $110 or perhaps lower.

With an equivalent barrel now at less than half that $130, I can only shake my head in wonder. Yesterday morning a gallon of unleaded gasoline in Independence fell from $2.05 at breakfast to $2.01 by lunchtime.

What is going on? Even with my slightly tarnished crystal ball, I did not see this coming this quickly. The basic economic principle of supply and demand is surely a wondrous thing. By hook or crook, we in the United States have cut back our consumption of oil by several percent in the past six months. That might not sound like much, but as with anything related to our economy, small percentages mean extremely big numbers in absolute terms. Add to that the effect of the summer driving season being over.

The supply side is helped by the very existence of higher prices, a factor not often given credit for any redeeming qualities. Many marginally productive wells were shut off when oil went down into the teens not too long ago but the profit motive will open them up again. Also throw in a comparatively mild hurricane season in terms of rig and well damage.

The prices of oil and all other commodities we use including grains, livestock and metals have shown their incredibly tight inverse relationship with the strength of the dollar or rather the lack thereof lately. Since that article about July 22, the dollar has risen by about 20 percent or perhaps $26 a barrel. Finally, the hedge funds seem to be betting now on oil’s downside as heavily as they did earlier to the upside. (By the way, before hedge funds existed, who in the world did we have to blame for all financial ills?)

Regardless of the reasons for the freefalling energy prices, this unexpected development should yield great dividends in reducing the severity of the actual economic slowdown now in progress. If you can fill your tank now for $36 instead of $72, you just might have some coin left to buy something else.

I also re-read some other articles I produced in the past four or five months. I cannot help it if I am optimistic by nature or self-training, but even I am tiring of emphasizing every positive facet of the markets I can observe. I would not bet against Warren Buffet though since he is buying stocks now and Bill Gross, the king of the bond market has recently joined the positive side. Remember that in good times, things are never quite as good as they might seem and the opposite is also just as true in bad times.