Posted on 11/13/2015 4:12:40 AM PST by thackney
You are correct, but since US economy has transformed from mostly a manufacturing to services base, the effect of neg impact to hi energy has lessened.
All oil prices are priced at the prices of those last few barrels sold that are in demand. Diesn’t take much production to have large effect. SA is only one capable of providing swing production.
Principle is like stock market. The many shares that are not traded are priced at the same value as the very few that are.
Not really. Gas prices are highly inelastic. The change in demand is very small in comparison to the (very frequent and sometimes very large) changes in gas prices.
Most won't cancel the weekend trip to the city just because gas prices went up, and wouldn't add one just because they fell. Most other transportation is non-optional. Driving to work/school, to the store, and to our entertainment choices is mostly the same as when gas was twice its current price just 4 years ago.
Your point is well-taken that if we spend less on energy, we have more to spend on other things ('we' meaning individuals AND businesses alike)... but I also wouldn't go insulting people and their 'conservative cred' for not having a macro-economics background.
Excellent point, but ‘flooding the market to gain market share’ (as the poster wrote) is not the same as simply affecting prices. SA’s market share is not changed with just a change in price.
My point it does not have rain as much as in Noah’s time to bring about a flood.
The downside to this is when the oil industry loses enough, the Saudis will control our prices and supply.
We need energy independence and the US Government needs to lay off of the heavy-handed taxes - taxes are what makes the end product so expensive.
He’s comparing apples and oranges.
Take his 3 examples.
Travel more, eat out more, shop more.
If you added 1 job for each, motel help, restraint help, retail help the combined cost related to hiring these 3 people for a year wouldn’t cover the cost of the production tubing for a single well.
There are dozens of higher paying jobs than the 3 examples that are necessary in getting that tubing to the well.
There is simply no comparison to be made.
There is simply no way to compare the savings from lower fuel being spent and put back into the economy and jobs in oil and gas being lost as a negative to the economy.
If 1000 people saved $200/month each on fuel every month and then spent those savings that’s only $200,000 being put back into the economy.
If 1000 oilfield workers loose their jobs there is close to $200,000 being taken out of the economy each day or about $5-$6,000,000/month and that is just for their salaries.
I would agree that there is a downside to it.....I don’t know that I’d go so far as you say on the Saudis, because low oil prices and North American production have all but destroyed OPEC.....and that NA production can ramp back up if Saudi starts to gouge.
BULL....energy prices are inelastic on the short term...but NOT on the long term, and Not on vacation or business travel. Just wrong on that one.....
not really, service businesses quite often involve fleets.....and fuel is a huge line item, normally second behind payroll.
But recall that if OPEC is destroyed as a cartel, then the former members are free to trade in the market as they see fit.
Global sales will result from the ability to trade, reliably produce, and take care of customers.
yes I agree.....
Here's the real bottom line...Savings from low gas prices going to rent, food
Yes, really.
Fleets of vehicles will not begin to touch the extraordinary energy usage of smelting steel or building cars.
but dude...commercial construction skyrockets when gas prices are low and transport costs are low and construction costs are low and farm equipment booms and on and on and on and on...it’s not just the fleet....come on, grow up here and step back and listen to how you’re denying the very validity of “supply and demand” with your reasoning.
When the price of a commodity goes down, the usage goes up. Period. More gas being used means more travel, more commerce, more building, more of EVERYTHING.....and it will eventually lead to another increase in gas prices which will lead to an increase in oil prices...at some point.
Dude, supply and demand. Learn it, love it, live it.
Your point forgets the magnitude. Our base is no monger manufacturing, and fleets are far less energy consuming.
There’s more manufacturing than you think.....we’ve lost a lot, but we’ve added even more. This is one of the big lies...people are focusing on certain shrinking industries and ignoring the successes.....and there are many. The biggest German auto plant is in SC. The biggest Japanese engine production plant is in Ohio.
Low energy costs propel all of this.
Like everything in economics, EVERYTHING - yes, EVERYTHING - it’s dynamic and there are winners and losers. In energy where a few per cent of the people participate but 100% consume, the winners outnumber the losers big time.
Our economic crash in 08 had it’s genesis in the 2005 oil / gas price shock.
The days of USA being a manufacturing economy are in the past.
Current manufacturing is a far cry from the past.
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