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 ...
Don’t worry. Democrats hate low gas prices and will do all they can to raise them with new taxes. Then, when prices go up, they’ll blame them on Republicans.
Krugman can KMA. I’m filling my tank at $1.60 a gallon today.
Who cares if Saudi Arabia has to undergo painful austerity. Maybe a few less bombings and mosques will be funded.
The energy industry counts for 20% of the US Economy. I’m constantly amazed at the number of people who think we can bankrupt that sector and the economy will be great.
Hey Paul, just remember that Americans will buy a $hitload of high dollar, high margin SUVs when gas prices go down like this.
In the United States, businesses engaged in oil and gas extraction and refining spent almost $200 billion on new equipment and structures in 2013, the most recent year for which data are available....
Oil and gas projects around the world worth $380 billion have been postponed or canceled since 2014 according to Wood Mackenzie, an energy consultancy.
http://www.freerepublic.com/focus/news/3385504/posts
Lots of dollars no longer creating orders and jobs at all the pipe, valve, pump, motor, cable, controller, structural steel, etc, companies. It is not just hurting those direct in oil and gas.
Well, Dollar is from $1.64 to $1.41 against pound sterling.
Oil is doing real damage.
Maybe a floating tariff that kicks in when oil drops below $40.00 per bbl. Keeping oil at $40.00 per bbl would stabilize everything and put a floor on oil.
I guess it comes down to who’s Ox is getting gored.
For the little guy, cheap oil means cheaper fill ups, heating costs, and by small amounts, lower costs of goods overall. So life becomes a little less expensive.
For banks, it means more defaults on oil field loans, equipment companies, etc. For holders of mineral rights, it means lower payouts. Likewise, for governments that charge a percentage of the final cost of gas, it means fewer tax dollars.
It's only a matter of time before our "capitalist" country gives that sector (more of) a bailout courtesy of Uncle Sugar.
Oil people make you think demand is fixed.
The cost of a commodity fluctuated when supply went up and costs of production went down. No one could have seen this coming. No one.
Most people can’t or refuse to look past the $21.50 they saved when they filled their car.
Are you going to tax $8 oil at the same tariff as $35 oil?
Why stop at oil? If this is good for business why not taxes all imports at the same rate?
How do you think making our refined products much more expensive than those produced in Canada and Mexico will work out?
I like $1.50 gallon gas
20 dollar oil is neither good nor bad for the Economy. it is a symptom of the economy. Doing anything outside the market to force up theprice of oil or to force it down will be negative for the economy and for consumers in al time frames.
Frackers have gotten their price of production down below $40/bbl.
The immutable law of supply and demand is in motion. With cheaper gas prices, more miles will be driven, purchases in other sectors will increase, etc. SUVs will remain the vehicle of choice, even liberals will avoid hybrids.
It is not Saudi Arabia’s desperate straits, nor even the Russian economy now tied inexorably with the petroleum prices.
It is with the one segment of the economy which had been the bright spot, the growth of the oil patch and the thousands and thousands of jobs that were pouring into areas where the more modern methods of recovery and extraction were going on, particularly North Dakota, and the resurgent oil fields in Texas and Oklahoma, but where growth is now stalled.
And worse, the Strategic Petroleum Reserve storage is NOT being refilled, which would do something about the plummeting prices, even in a small way.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.