First  Prev  1  2  Next  Last
Post Reply Do you think low oil prices benefit the US economy?
Vempy 
19086 cr points
Send Message: Send PM GB Post
27 / F / Canada
Offline
Posted 1/29/15 , edited 1/29/15

KesshoHime wrote:

From what I've heard the lower gas prices are an attempt to get rid of alternative energy competitors. Basically they want to reduce the prices so low that people won't want to invest in electric cars. Once they've determined that their competitors won't be a problem, the prices are going to jump again. I have no idea if this is the real reason but i've heard it a couple times from different people, make what you will of it.


I'm pretty sure it has nothing to do with combating alternative energy sources and securing a market share. Oil and gas has a significant foothold in the energy market that probably isn't going away anytime soon. It's a matter of supply and demand. There is more supply than demand and so they've dropped the oil prices.

Although it looks like a great benefit to our day to day lives it's not a long term benefit to the American economy. America is, as pointed out, a very large player in the global oil and gas industry. There are a number of states that are based on an oil-dependent economy. part of the issue with those low prices is that if it continues to fall the companies will not be making any profits. The effort to extract the oil and gas will cost more than what they can sell it for.

The capitol budgets of the oil and gas companies also affect a number of other sectors of he economy (ie: environmental consulting, contractors, construction). There's a whole supporting structure of companies, trades and consultants that depend on a strong oil price.

Yes I appreciate that I don't have to pay as much for gas right now, but I'd rather pay more at the pumps in exchange for a less precarious economy that is still recovering.
16295 cr points
Send Message: Send PM GB Post
24 / M / Midland, Texas
Offline
Posted 1/29/15
You guys should read into some news letters on Rigzone.com. That site has a ton of news from all over the world that's freely accessible to read. In the long term this actually will both help and hurt economies and companies. The low price in oil will force company restructuring to a more cost effective build, however many of the smaller companies that have taken out loans for their business will be most likely bought out by larger companies. What the main factor that will decide if this will be a good or bad thing is if people learn from this and plan accordingly for fluctuations in the market like this (which could've been seen coming for months ahead). Balance always occurs no matter the market and this industry will come back roaring with a vengeance once the supply glut has been culled. I predict once demand rises back up we'll see oil at $120 a barrel at that time.
Posted 1/29/15
Do you want to ask about deflation perhaps?
14470 cr points
Send Message: Send PM GB Post
26 / M / Houma
Offline
Posted 1/29/15 , edited 1/29/15

geauxtigers1989 wrote:

My state is getting hit hard by it. Louisiana is dependent on oil being ~$80/barrel. Combine that with years of our governor's economic mismanagement, and LA is now facing a budget crisis it hasn't seen in decades. Of course, the solution is to cut over $600 million from the education and healthcare funds because everything else is untouchable, per the state constitution. This place is so backwards, it's ridiculous.


Let's not forget the lowest level either with all the layoffs... This is bad both short and long term.
65319 cr points
Send Message: Send PM GB Post
32 / M / Atlanta, GA
Offline
Posted 1/29/15
Low oil prices, to some extent, are a sign that economic activity is tapering off in parts of the world. As I normally like to tell people "you don't need gas if you're not going to work, so you don't need oil to make more gas." China in particular I think started declining in the past year or so.

Oil prices are probably more reflective of a declining economy and don't really have a whole lot of feedback into the system. It's not like people will suddenly have jobs if oil declines, just like people won't suddenly get jobs if taxes go down.
4215 cr points
Send Message: Send PM GB Post
26 / M / Waterloo, Ontario
Offline
Posted 1/30/15
Low oil prices obviously benefit the economy because the economy is founded upon cheap oil. However, low oil prices are only temporary. The price of oil will spike up to a much higher price soon or eventually because oil is a finite and nonrenewable resource, which is about to peak soon. Have you ever heard of the concept of peak oil? Peak oil is real. What peak oil means is that eventually you will use up half of the resource, meaning you can't increase oil production anymore. After peak oil is reached, the amount of oil you produce will continually decrease until you have nothing more anymore.

When peak oil is passed, the price of oil will become unbearably high and fluctuate widely. This is called the bumpy plateau of oil prices. The price of oil spikes to a new high, which reduces oil consumption. This shuts down economic activity and the price of oil drops. But once the price of oil drops, consumption of oil increases which causes the price to increase again. This shuts down any further economic activity. So what you end up with is a bumpy plateau. It is fairly certain that the mortal blow to human industrial civilization will happen when the price of oil spikes again, and nobody can afford that oil. And then everything will just shut down.

We are experiencing the bumpy plateau. Price of oil spikes to a new high. Economic activity is shut down, which causes the demand for oil to also fall. And then the price of oil drops, which causes renewed economic activity. But once oil consumption increases again, the price of oil increases again because you run into the finite oil again. Which causes everything to shut down again.
17777 cr points
Send Message: Send PM GB Post
33 / M / outer wall, level...
Offline
Posted 1/30/15 , edited 1/30/15
well i for one will be driving 1,500 miles this weekend, so i will enjoy the 1.80 a gallon and the 32mpg!
2014 cr points
Send Message: Send PM GB Post
24 / M / Bavaria
Offline
Posted 1/30/15
I guess it will boost some sectors fore a short period of time. In the long term it might make the demand go up. Not that good if you ask me.

Also cheap gas and oil mean less pressure on innovating and inventing alternatives.
And it is hurting the Russian oligopolies quite a bit. I can't judge if that is positive. Because only because they have losses does not mean somebody else gains from it.

Furthermore, if it is cheap, might as well take advantage and waste it.
40013 cr points
Send Message: Send PM GB Post
M / HI
Offline
Posted 1/30/15
Well at least Gas is cheap for now lmfao
Posted 1/30/15
The prices benefit my wallet. I know that much.
Posted 1/30/15
Probably not. Aren't you producing more of it now? This drop may benefit on a temporary basis but overall it's bad news. Supply of fossil fuel was already in a crisis, this might be the fire before the candle burns out.
Sogno- 
45762 cr points
Send Message: Send PM GB Post
Offline
Posted 1/30/15

Lowlights wrote:

good for me


QFT

i'm perfectly fine with it. i can spend more money elsewhere
Posted 1/30/15
As a delivery driver-
this rocks for me.
:) More money introduced to the economy (without borrowing it) is always good.
1651 cr points
Send Message: Send PM GB Post
27 / M / Mor Dhona
Offline
Posted 1/31/15 , edited 1/31/15
What sort of question is that? Of COURSE it's good for the economy, if only in the short term. Lower gas prices means travel is more affordable, which means tourism is more feasible. It can also lower the cost of goods, since most people buy their products from places like Wal-Mart and Target what ship their products in.

That said...


DesuMaiden wrote:

Low oil prices obviously benefit the economy because the economy is founded upon cheap oil. However, low oil prices are only temporary. The price of oil will spike up to a much higher price soon or eventually because oil is a finite and nonrenewable resource, which is about to peak soon. Have you ever heard of the concept of peak oil? Peak oil is real. What peak oil means is that eventually you will use up half of the resource, meaning you can't increase oil production anymore. After peak oil is reached, the amount of oil you produce will continually decrease until you have nothing more anymore.

When peak oil is passed, the price of oil will become unbearably high and fluctuate widely. This is called the bumpy plateau of oil prices. The price of oil spikes to a new high, which reduces oil consumption. This shuts down economic activity and the price of oil drops. But once the price of oil drops, consumption of oil increases which causes the price to increase again. This shuts down any further economic activity. So what you end up with is a bumpy plateau. It is fairly certain that the mortal blow to human industrial civilization will happen when the price of oil spikes again, and nobody can afford that oil. And then everything will just shut down.

We are experiencing the bumpy plateau. Price of oil spikes to a new high. Economic activity is shut down, which causes the demand for oil to also fall. And then the price of oil drops, which causes renewed economic activity. But once oil consumption increases again, the price of oil increases again because you run into the finite oil again. Which causes everything to shut down again.


I'm not as "doom and gloom" about it, but peak oil is definitely an inevitable problem the world is going to have to face, whether it's today, tomorrow, or ten years from now. Crude oil is a finite resource, but we do have possible alternatives; regrettably these are not fully developed, and oil companies regularly lobby to prevent or slow their development.
First  Prev  1  2  Next  Last
You must be logged in to post.