Cheap oil is an opportunity we can’t afford to burn — Transition Voice.
The stunning plunge in oil prices – almost 45% since June – has roiled the global oil markets; creating new winners and losers almost overnight. It has also unlocked a number of potential problems and opportunities we would be wise to consider.
In our consumer-based economy, savings at the gas pump provide a direct stimulus to the economy – freeing up a reservoir of new discretionary dollars to fuel the economy. Indeed, SUV and small truck sales are skyrocketing (How soon we forget how quickly gas prices can go up) and fuel-intensive sectors – like airlines – are enjoying record profits.
For others, falling oil prices are not so good. Geopolitically, it has been a disaster for oil-exporting countries; Russia, Iran, Venezuela and others are all getting clobbered. Shale oil producers – with fracking and horizontal drilling costs that far exceed OPEC’s cost for extracting conventional crude oil – are also starting to retrench.
The disconnect between Wall Street and Main Street is growing. While lower pump prices are a bonanza for Main Street, Wall Street and investors in energy and related junk bond sectors are getting edgier by the day – their concerns exacerbated by a stagnant global economy that is dragging down oil demand and putting oil prices into a free fall.
– See more at: http://transitionvoice.com/2014/12/cheap-oil-just-keeps-on-coming/#sthash.4xoeIbzE.dpuf
