It was only a few weeks ago that the price of oil seemed headed higher, after news stories reported that an opec agreement to cut its production quota by 7%, to 22.5 million barrels a day, was a done deal. The cut in output was intended to boost the price to $21 a barrel.
But things didn't work out that way. Saudi Arabia refused to sign off on the deal, and the quota was reset at about 23 million barrels a day, causing prices to plunge from $20 to $18.50. Economist Michael K. Evans of Evans Economics Inc. figures that's enough to clip 0.3% off the inflation rate this year.
Presumably, the Saudi action was intended to help shore up the world economy. But observers can't help noticing that the kingdom owes a particular debt to George Bush. Whether intentional or not, the Saudi move will boost real incomes in the U.S., adding zip to any recovery and boosting the chances of reelection for the incumbent in the White House.