The price of oil has always and will always be a hot topic in terms of the Economy. It has been a surprise to many how the price of oil continues to remain low, and this is predicted to remain the case moving forward. Most recently oil prices have ranged between $80 and $110 a barrel. They dropped to as low as $26 per barrel and are expected to remain between $40 and $50 a barrel. The major reason for such a drastic decrease is the recent influx in shale oil. The main question that needs to be answered is how these low prices are going to effect the economy. Stephen Moore, an economist at Freedom Works is among one of the people who believes that this is a good thing for our economy. With the oil prices down around 60%, Moore notes that for every one-penny reduction in gas prices, that is over a billion dollars for consumers to spend the money on other things, and that savings and investment are the keys to an economy if consumers decide not to spend the money they save. He also makes a solid point that American companies benefit greatly from lower oil prices because they are able to produce at a much cheaper rate. With consumers being able to have more money in their pockets to spend elsewhere, along with being able to save this money, and/or invest it, it seems to me that the lower oil prices certainly can be a good thing for our economy. More consumer consumption, saving, and investment are all outcomes that positively benefit us, and so do our companies being able to produce more for less, allowing for a competitive advantage over countries where the oil prices might not be as low. In my opinion, at least for now, it seems that the low oil prices are a good for US consumers and producers, and our economy as a whole.
http://www.wsj.com/articles/are-low-oil-prices-good-for-the-economy-1479092581
It is important to note, with the emergence of shale oil and fracking practices the United States might gain energy independence. With that,because the demand for oil continues to rise how long would the United States experience that state of "energy independence". Important to think about how that would affect the United States' trade relations with OPEC.
ReplyDeleteThe low oil prices can be a positive in a way, but they can also be negative. Although American companies can produce at a lower price they also will not be able to have as many people employed as they would like to when prices are low. The low oil prices have also shut down a lot of United States oil companies. It will be interesting to see where oil prices go in the future.
ReplyDeleteDo you think oil is going to still be a commodity in 100 years? With persisting conflicting views about global warming from executives such as Trump, it will be interesting to see what policies are put in place and what the reaction to them will be.
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