With all that's going on in today's economy and with all the influences pushing oil prices up and down, who would have thought "volcanic ash" would be a reason for falling oil and jet fuel prices?

With the Iceland volcano fiasco entering a fifth day of disruption European flights, not only are jet fuel prices being pulled lower as demand is crippled, but its also helping pull the entire oil complex lower. Oil prices have flirted as low as the $80/bbl range with gasoline futures trading down as much as five cents per gallon. Add that to the losses we saw on Friday, and we have quite the turnaround. Add some news of the SEC investigation of oil player Goldman Sacs, and I wonder how far down these two stories will carry prices.

With the ash disruptions forcing the canceling of many flights, it is said that jet fuel demand is dropping upwards of a million barrels per day, hardly a drop in the bucket. United States production of jet fuel is nearly the same amount of the drop in demand, so there will certainly be a nice drop in jet fuel prices for airlines, which I'm sure they won't pass on.

Having said that, it would also appear that the fall in flights will push up European gasoline and oil demand as would be passengers take to the roads to drive to relatively undisturbed Spain for a flight out. The impact on demand for gasoline and diesel has yet to be seen, but the way things are looking, it will be notable- however- not as notable as the drop in demand for jet fuel in Europe.

The good news for motorists in North America is that the news is pushing wholesale prices here lower- but as many know it will take time. The recent drop in oil prices as a result of these two pieces of news has me thinking about revising my summer forecasts- but looking at the amount of oil contracts that remain long, I doubt a revision is necessary.

Let's just play it by ear and see how the volcanic disruptions alter oil prices.