If the oil price is too low (that is, what people buy it at to make the energy) then the suppliers and producers lose money and investors won’t invest in a losing product. Thus no more development, abandonment of current activities, etc.. It’s a giant sucking sound.
The oil industry in Texas - with the thousands of people who work in it - is very concerned, this isn’t a “just on paper” loss.
“If the oil price is too low (that is, what people buy it at to make the energy) then the suppliers and producers lose money and investors won’t invest in a losing product. Thus no more development, abandonment of current activities, etc.. It’s a giant sucking sound.
The oil industry in Texas - with the thousands of people who work in it - is very concerned, this isn’t a “just on paper” loss.”
That’s one take on it. The other is that there is far more money outside of the oil industry than inside it. The cost of energy factors into a far larger economy and percentage of GDP and jobs OUTSIDE of oil. The cost of oil impacts the cost of all other energy, from dorky windmills to nuclear power.
The “loss” you’re talking about in the oil industry really IS “paper”, just as much as the stock market is. We have had presidential dynasties dedicated to propping it up. This has been to the detriment of the entire rest of the American economy.
I believe that history has shown that energy costs can never be too low. (Assuming you’re willing to put up with the pollution.)
Right, so the energy sector takes a hit - I get that. But cheap energy should be better for the economy as a whole...I’m still skeptical that it would cause the markets to crash.
Could it be that after three years of expansion there is a perception that we are overdue for a “correction”, and investors don’t want to be caught flat-footed, so they are sitting their with their finger hovering over the sell button?
Exactly.