Cheap Oil Also Means Cheap Copper, Corn and Sugar: Commodities

http://nr.news-republic.com ^ | Dec 9, 2014 | Isaac Arnsdorf

[Maelstorm]

Lower fuel prices are compounding the longest commodity slump in a generation.

Because energy accounts for as much as half the cost to produce food and metals, all sorts of commodities will keep dropping, according to Societe Generale SA and Citigroup Inc. With inventories ample and slowing economies eroding demand, cheaper oil lowers the price floor for mining companies and farmers to remain profitable. Corn may drop another 3 percent, cotton 6.5 percent and gold as much as 5 percent, SocGen estimates.

Costs are falling as surpluses emerge in copper and sugar and as the economy slows in China, the top consumer of energy, metals, pork and soybeans. The Bloomberg Commodity Index of 22 items is heading for a fourth straight annual drop, the longest slump since its inception in 1991. Brent crude, gasoline and heating oil are the biggest losers as an increase in U.S. drilling led to a price war with producers in OPEC.

[Maelstorm]

Cheap energy is good for everyone and its the primary thing that is propping up the current economy. The left likes to talk about redistribution of wealth but cheap energy inherently distributes buying power downward as prices plummet and less credit is needed.

[familyop]

China is hoarding more oil now, has oil production facilities all over the planet and is the fourth greatest producer of oil.

https://en.wikipedia.org/wiki/List_of_countries_by_oil_production#Countries

China surpasses U.S. to become largest world economy
http://freerepublic.com/focus/f-news/3234442/posts

Have fun. Enjoy de sride.

[luvbach1]

Not everything is dropping. Airlines added surcharges when fuel prices spiked and I haven’t heard they’ve been removed. They also eliminated “free” dinners and lunches (they were never really free) on long flights, jammed more seats into Coach, and reduced the number of carry-ons allowed.

[expat_panama]

they were never really free

That's just it --meals, carry-on's, seat width, all this stuff is paid for by customers whether they use 'em or not.  Personally I prefer being given the choice on what I'm paying for, so when I fly I like having my ticket price set after I say how many bags I'm bringing.

[ontap]

Cheap energy is good for everyone

This fact is why democrats are the worst thing for the economy......they have no perception of the effect of taxes and prices on an economy.

[SunkenCiv]

Thanks Maelstorm.

• Why America's fracking revolution won't be hurt (much) by low oil prices
• Dumb Policies Frustrate Benefits of Falling Oil Prices
• North Dakota to require every barrel of crude oil be filtered
• Oil Is On 'An Incessant March Downwards'

related sidebars:

• The silent crash in commodities -- a warning sign
• Somebody Is Manipulating the Numbers: In The Realm Of Economics, A Change Of This Magnitude Is A Collapse