This is good news (actually, a continuation of good news):

The Energy Department said crude inventories rose 2.7 million barrels for the week ended Oct. 28 to total 319.1 million. That’s 12% above the year-ago level. Motor gasoline stocks were up 1 million barrels at 196.9 million barrels. Distillate supplies fell less than expected, down 200,000 barrels at 120.9 million. December crude was down 15 cents at $59.70 a barrel. December unleaded gas was down 1.36 cents at $1.59 a gallon. December heating oil lost 1.25 cents to $1.7925 a gallon.

Oil prices peaked on worst case scenario speculation at a bit before the big hurricanes rolled through, but that combination of higher prices and lower seasonal demand did exactly what rational heads expected: lowered demand and usage. The prices are fluttering down now, even though distillate inventories continue to show declines (albeit smaller and smaller declines that will probably turn to increases toward the end of the year).

The steep rise in oil prices was (ahem) fuelled by speculators and alarmists, not by actual scary conditions. The usage trend followed a typical line through the summer and into the fall, and, although that usage was greater than in the past, it wasn’t the terrifying increase that some people forecast. Unfortunately, that spike and the continuing high oil prices finally caught up with us in higher costs rippling through our economy.

But if I were to speculate, I would guess that the worst of the economic news is over and, barring an exceptionally poor Christmas sales season, the trends should be positive through much of the economy (tech’s wild oscillations and the auto industry’s woes notwithstanding). The one thing that does make me a touch nervous is that when the alarmists are given so much airtime by the media, the public perception is already biased toward the negative. Predictably, consumer confidence has been sagging.

With so many retailers relying on healthy holiday season spending, the economy benefits from a positive consumer outlook--in fact, a bad holiday season can send ripples through the economy in the same way that high oil prices can. Low confidence means low spending means low revenues means poor quarterlies means lowered consumer confidence when big stocks under perform--entire segments of the marketplace can take a hit because the consumer view doesn’t quite match the economic reality.

I remain cautiously optimistic because of the lowered oil and gas prices. If prices continue to flutter down, the shakiness that people feel when filling up their extra large SUV will subside, too. That doesn’t mean that typical Americans will return to their big truck loving ways--while those trucks will probably always be part of our landscape, the preference for smaller, more efficient cars is a permanent one. We’ll still guzzle gas, but we’ll guzzle at a slightly slower rate.

The stock market is also primed to either make or break consumer confidence. Watching the market has been painful lately (when it hasn’t been exhilarating). But lower energy prices (including heating oil) along with economic data that hasn’t been as bad as some people feared during this last bit of the hurricane season might mean that the market is ready to make a steady, if moderate, climb. The market isn’t always a great indicator of economic health, but it is a good precursor to consumer confidence--especially since so many Americans now own stocks in one form or another.

Anyway, good new is good news, and lowered energy prices could go a long way in helping steady our economy.