Posted on 12/04/2014 12:52:59 PM PST by SeekAndFind
The price of oil has crashed to multi-year lows.
Falling energy prices are good for the US consumer. But they're bad for the big US energy producers.
Remember, technological advances in hydraulic fracturing have sparked the US shale energy boom, which has been a source of economic growth thanks to capital expenditures and job creation in the industry. Low oil prices may put this story at risk.
So on net, are falling prices good or bad?
Charles Schwab's Liz Ann Sonders offers some simple math that puts it all into perspective. In three sentences:
Consumer spending represents 68% of the US economy. Oil and gas capex represents about 1% of US GDP and less than 9% of US total capex (which in turn represents about 12% of US GDP). Therefore, the benefit of lower energy prices to the consumer and many businesses greatly outweighs the significant hit to energy companies and/or energy-oriented capex, especially in energy-oriented states.
So unless you're heavily exposed to energy capex, falling energy prices are overwhelmingly good.
At a media event on Thursday, Sonders' colleague Jeffrey Kleintop noted that historically, consumers spend every penny of the savings they get from energy.
(Excerpt) Read more at businessinsider.com ...
Yep. On ObamaCare policies, and inflation ravaged essential goods caused by the Fed's printing presses. BFD.
In my case, it's a few less dollars I have to take out of savings each month.
I doubt that *ANY* U.S. energy producer, their stockholders, stakeholders, employees, management or directors gave the slightest bit of a damn when I couldn’t afford to fill my truck.
$5 a barrel, baby, and cry me a river.
What a crock....so these energy giants didn’t think putting loads of more oil on the market would affect prices. I would say the past decade of artificially inflated prices more than make up for it!!
And why is that a bad thing. When oil prices go down the green energy scam goes away too... along with financing terrorism and just about every other bad thing coming out of the mid-east.
fuirst of all, these aren’t ‘crashing oil prices’- they are prices getting back down to what they SHOULD BE- like they were for 8 years during bush’s term- it’s awful funny that prices began to skyrocket right after obammer took office- and we got all these convoluted excuses for why it was happening- and it’s funny how we were perfectly capable of maintaining our roads and bridges for many years on low oil prices, but our current government couldn’t manage to save enough money from DOUBLE the prices in taxes when gas shot up to twice the amount- and now all of a sudden we’re ‘running out of money for roads and bridges’?
Did demand for oil double from the year 2008 to 2009? Because oil prices nearly doubled- Did the world’s population double or something in one year? What exactly was the justification for going from under $2.00 a gallon at the beginning of bush’s term to over $4.50 a gallon under obeamer? There was NO honest justification for oil rising that high per barrel- none-
Oil prices are getting back to normal prices- sure, companies who extract oil and truck it etc and certain other busiensses will not get as much as they did when oil was - but the fact is they were experiencing a windfall lottery boom because of the ARTIFICIALLY inflated for political reasons rise in oil prices that they normally would NOT have received had a republican won the office- when obeamer won office, opec ‘tested the waters’ by raising prices slow but steady, then in bigger jumps, and when they saw people just rolled over and took it- they kept raising it knowing full well they were gouging us and no one was going to squawk loud enough to stop them doing so - and ocne they got that gouging practice going, there was no way they were going to relent- easy free money in their pockets- money they simply lifted from the pockets of the working class while they weren’t looking-
they, opec- (AND our government- who found out they could get DOUBLE the gas taxes if prices went up double) got a taste of greed, found out that they COULD get away with it, and they will NEVER relent EXCEPT when they are threatened like they are now with the current oil boom happening in this country- That is the ONLY reason prices are falling- to punish our oil companies by making prices so low it’s not worth the time and money to drill any longer in the expensive to extract shale oil fields-
It’s a dirty business all the way around! and WE, the working class citizens, are the ones getting screwed
Market forces correcting the price either way up or down is hardoy "dirty". What is "dirty", however, is politicians ogling $2.00/gal gasoline ready to go and "get theirs" by increasing gasoline taxes... that will not ever go down or disappear.
Consumer spending represents 68% of the US economy. Oil and gas capex represents about 1% of US GDP and less than 9% of US total capex (which in turn represents about 12% of US GDP). Therefore, the benefit of lower energy prices to the consumer and many businesses greatly outweighs the significant hit to energy companies and/or energy-oriented capex, especially in energy-oriented states.
“That is the ONLY reason prices are falling- to punish our oil companies by making prices so low it’s not worth the time and money to drill any longer in the expensive to extract shale oil fields-”
you are getting it mostly right.
the way oil contracts are set up makes it much more lucrative to be domestic producers when prices are high.
When they crash like now, monies dry up domestically and, guess what? the majors go to international contracts to exploit as they have less downside risk.
in other words:
prices up, lots of upside to drill USA/
prices down, no one makes as much money, but one gets some downside risk lessened when drilling internationally
Liberals are worried.
Our mobility is enhanced and we’re spewing more evil carbon.
You are spot on. Dirty politicians
Raising gas tax overdue: Barney Frank
http://www.freerepublic.com/focus/f-news/3233852/posts
The gas tax has been fixed at 18 cents for two decades. Now would be a great time to raise it
http://www.freerepublic.com/focus/f-news/3233660/posts
If Lockheed Martin Skunk Works comes out with a compact fusion reactor prototype in less than a year, as promised, oil may become irrelevant very soon.
No it doesn't. This is the kind of dumb, single entry accounting that makes the business press so laughable. How can you spend unless you've earned?
[[Market forces correcting the price either way up or down is hardoy “dirty”.]]
The dirty part comes with heavy handed government regulations on ALL oil production businesses- right down to the refineries that are so heavily regulated that they can’t breath any longer-
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