“I know there are many folks who work in the oil industry, but I wish someone could explain how lower oil prices are so terrible for the rest of the economy.”
Supposedly, the drop in oil reflects an emerging world wide recession. The world economies are retracting, not expanding. Consequently, they aren’t buying oil and the price is dropping. It’s not that the price of oil is driving the economies/markets lower, it’s that the lower price of oil reflects something else that driving markets/economies lower. I’ve read reports where oil demand is actually up, but oil is so plentiful that it is driving prices lower.
Personally, I think the real culprit is China. China stimulated the crap out of their economy and stock market over the past few years. Their stimulus made ours look small. As China slows, it creates a ripple in the countries China was buying commodities to turn into manufactured goods.
There are a significant number of commodity based economies that are struggling to cope. Australia, Brazil, all the oil producing countries, etc. These struggles reduce demand for manufactured goods, ie, trucks, tractors, airplanes, consumer goods, etc. It’s a vicious circle.
BTW, don’t bet on my opinion being right. But, I went to 100% cash yesterday. Should have done that a month ago.
People sell because they fear a downturn. The increased selling drives values lower, fueling more selling. When everyone is selling, it might wise to look for some bargains.