Posted on 01/19/2016 11:12:03 AM PST by bananaman22
While low energy prices are thought to provide a boost to the global economy as consumers benefit from lower costs, there are growing signs that the dramatic collapse in oil prices – so sudden and so severe – is actually creating economic headwinds. The oil and gas industry spent $200 billion on drilling, refining, and new equipment in 2013, and the sharp cutback in spending is being felt beyond just the oil patch. Last week Wood Mackenzie estimated that $380 billion worth of oil and gas projects were scrapped by the industry.
In The New York Times on January 16, Paul Krugman explored the issue. Oil and gas companies start to have liquidity problems when oil prices crash by 70 percent in less than two years. The drop off in spending hurts broader industrial activity. Meanwhile, oil-producing countries like Saudi Arabia have to undertake painful austerity.
(Excerpt) Read more at oilprice.com ...
I’m now driving one of those F250 from an oil logging company, no longer needed it from a work slow down I imagine.
There is opportunity. It has been interesting watching prices around here drop (for now) as inventories are reduced. Some folks ordered too much because they were not watching the price of oil and the rig count falter, then start sliding. I have been on the bank, catching up on five years worth of honey-dos and I reckon I’ll have to get a job soon.
When was the last time Krugman was right about anything?
So many people can’t see past the price of a gallon of gas. Do they really think lower transportation prices will cause cheaper groceries, etc.? That’s pretty naïve.
He’s a legend in his own mind. We’ve seen Obama and Krugman diminish the value of a Nobel prize, to name just two.
Of course not. Greedy business owners will just stuff those newly gained profits back in their pockets. They all have offshore bank accounts to store their financial windfall profits.
demand is not fixed, it’s increasing. There’s just too much of a surge of product that is staying ahead of demand.
Of course there’s several other factors behind the scenes, but I didn’t come to write a novel.
You’re way out in left field, way way out there.
You’re thinking far too small. These low prices will drastically affect our economies, and not just those in the oil and gas industries.
As an example of the cost of regulations, consider that it's a dollar more per gallon in California.
My gosh, I have been saying this for over a year now.
Anyone wonder how we ever had an economy when Gas was under 1 dollar a gallon and you could heat your home on fuel oil for $400.00 a year in a cold climate? Not all that long ago either.
Our economy will sputter but we will be all right. The Saudis? Catastrophic
I saw $1.45 a gallon today in North Texas.
Energy costs as an input to production absolutely have an impact on end product pricing. Much of the stock on shelves was produced with a high $ energy fraction for feedstock, manufacture, and transportation.
As the older stock is cleared out of inventory, the selling price will recede. Prices didn’t go up overnight, and will work their way down gradually.
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