Top 15 For 2008 (No. 12): Roller Coaster Ride In Oil
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StreetInsider.com has put together its 'Top 15 For 2008' which chronicles our view of the most significant news on Wall Street during the tumultuous year.
Number 12: Roller Coaster Ride In Oil
The wild ride in oil prices - from record highs in the early part of the year to four year lows at the end of the year - was a major story for 2008.
2008 started out with a bang for oil bulls. The price of crude moved above the $100 per barrel mark and showed no signs of slowing down. By July, crude was trading at a new all-time record of $147.27 per barrel. The 'decoupling theory', a theory which suggests that emerging markets can be self-sustaining, or decouple themselves from the U.S. and other Western Countries, was proving true. Maybe the world didn't need a strong U.S. economy to grow. $4 per gallon gas at the pump was creating consumer outrage and political campaigns were being built around energy policies.
While the first part of the year was eventful, the second half of the year maybe proved even more breathtaking. After tapping the new high, demand started to falter, as the credit crisis was reeking havoc on the U.S. economy and economies around the world, and crude started to tumble. The declines were stunning. By the end of the year, crude had erased the historic gains and closed at four year lows. Crude ended the year below $45 per barrel. Simply Amazing!
FedEx (NYSE: FDX) in 2008 can be looked at as a case study on the effect crude was having on corporate earnings and then the demand destruction that obliterated the commodity. In early 2008, FedEx was issuing profit warning after profit warning, citing the high oil prices. But by the later part of the year, the profit warnings were being blamed on the macroeconomic conditions. So, toward the end of the year, while crude had plummeted from $150 to $40, the demand destruction in the economy was so great that the company was not seeing any benefit from the lower fuel costs and its profit outlook still had to be ratcheted lower.
The wild 2008 ride in oil also created massive volatility in alternative energy stocks, like solar stocks and ethanol stocks. Solar powerhouse First Solar (Nasdaq: FSLR) saw its stock hit new highs in the early part of 2008 only to close down 48% on the year. Other solar names like SunPower (Nasdaq: SPWRA) and Suntech Power (NYSE: STP) saw similar moves. Ethonal stocks were completly obliterated in '08, with VeraSun Energy (NYSE: VSE) filing bankruptcy near the end of the year.
Number 12: Roller Coaster Ride In Oil
The wild ride in oil prices - from record highs in the early part of the year to four year lows at the end of the year - was a major story for 2008.
2008 started out with a bang for oil bulls. The price of crude moved above the $100 per barrel mark and showed no signs of slowing down. By July, crude was trading at a new all-time record of $147.27 per barrel. The 'decoupling theory', a theory which suggests that emerging markets can be self-sustaining, or decouple themselves from the U.S. and other Western Countries, was proving true. Maybe the world didn't need a strong U.S. economy to grow. $4 per gallon gas at the pump was creating consumer outrage and political campaigns were being built around energy policies.
While the first part of the year was eventful, the second half of the year maybe proved even more breathtaking. After tapping the new high, demand started to falter, as the credit crisis was reeking havoc on the U.S. economy and economies around the world, and crude started to tumble. The declines were stunning. By the end of the year, crude had erased the historic gains and closed at four year lows. Crude ended the year below $45 per barrel. Simply Amazing!
FedEx (NYSE: FDX) in 2008 can be looked at as a case study on the effect crude was having on corporate earnings and then the demand destruction that obliterated the commodity. In early 2008, FedEx was issuing profit warning after profit warning, citing the high oil prices. But by the later part of the year, the profit warnings were being blamed on the macroeconomic conditions. So, toward the end of the year, while crude had plummeted from $150 to $40, the demand destruction in the economy was so great that the company was not seeing any benefit from the lower fuel costs and its profit outlook still had to be ratcheted lower.
The wild 2008 ride in oil also created massive volatility in alternative energy stocks, like solar stocks and ethanol stocks. Solar powerhouse First Solar (Nasdaq: FSLR) saw its stock hit new highs in the early part of 2008 only to close down 48% on the year. Other solar names like SunPower (Nasdaq: SPWRA) and Suntech Power (NYSE: STP) saw similar moves. Ethonal stocks were completly obliterated in '08, with VeraSun Energy (NYSE: VSE) filing bankruptcy near the end of the year.
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