The $4 Gas Threat: Oil Plunges But Recession Risk High

By Douglas A. McIntyre Updated May 6, 6:10AM EDT · Published May 5, 7:35PM EDT

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AAA Fuel Gauge National Average for Regular: $3985.

The price of oil made a staggering collapse today and fell below $100. Light, sweet crude for June delivery moved lower by 8.6%. Economic fundamentals have not changed enough in the last few days to justify such a dramatic move. But, April unemployment data could keep pressure on oil if it is worse than expected.

As a way to combat the current price of oil and to guard against long-term high prices Republicans passed a plan in the House to expedite oil and gas leases. In reality, there is nothing the action will do that could have any affect for several quarters. The legislation is not likely to make it through the Senate.

Car rental companies have used the rise in fuel prices to charge exorbitant amounts for gas. Hertz (NYSE: HTZ) is charging renters over $9 per gallon in many locations, which is impossible to justify economically even if the firm has to carry gas to refill its cars to rental locations by hand.

Among the grim observations of the day, Economist James D. Hamilton wrote at Time.com that “of the 11 recessions in the United States since World War II, 10 were preceded by a spike in oil prices.”

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.