Global oil prices have fallen sharply in the global market following fears that a further economic slowdown in the US could hit demand. Prices plunged more than $10 a barrel at one point in New York. It's the biggest drop in oil price in 17 years. Analysts are attributing the fall to an OPEC warning that high oil prices could curtail global demand for crude. Also, on Tuesday, worries over the health of the US economy increased following Federal Reserve Chairman Ben Bernanke's comments to the US Congress. "The effects of the housing contraction and of the financial headwinds on spending and economic activity have been compounded by rapid increases in the prices of energy and other commodities which have sapped household purchasing power, even as they have boosted inflation. Against this backdrop, economic activity has advanced at a sluggish pace during the first half of this year while inflation has remained elevated,” he said.
Meanwhile, US President George Bush has lifted a ban on offshore oil drilling. But it can't begin without Congressional approval. President Bush says there can be no quick fix solution to the ongoing oil crisis. "They can pass energy legislation. I readily concede that, you know, it's not going to produce a barrel of oil tomorrow, but it is going to change the psychology that, you know, demand will constantly outstrip supply. As I said in my remarks, it's going to take a while to get these reserves on line, but it won't take a while to send a signal to the world that we're willing to use, you know, new technologies to find oil reserves here at home,” he said.
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