My thoughts on the Crude Conundrum - Why Lower Oil Can Be Both Good and Bad. And how close we are to reaching a tipping point Most Americans do benefit from lower crude prices. Paying less at the pump means more money for discretionary spending (or saving, or paying off debts), which is not only good for consumers, but also many companies which benefit when we spend more of our hard earned money with them. It also means many companies have a lower cost of doing business (because they use fuel, too, and when prices drop, they pay less to produce their goods). But there is a tipping point at which oil prices get too low to support U.S. production, and that has costs jobs in the past, and can cost jobs now. Plus, the lower prices drop, the more it raises concerns about the health of the global economy. If the world is demanding less oil, it can only mean one of two things (or both simultaneously): either weve created technologies that use less oil OR we dont need as much oil, because our appetites are falling. If its the latter, and our demand is dropping, what does that say about global growth? Most analysts are telling me the number they are watching is WTI Crude at $40/barrel. Anywhere below there, and it could be a sign of trouble ahead.
Posted on: Mon, 05 Jan 2015 22:35:11 +0000
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