oil

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$20 Oil?

The falling price of crude oil was first thought to be a good thing. Consumers could spend less on gasoline. But a 60% drop in the price of the world’s most important commodity can’t happen without major disruptions.

A lot of investment decisions had been based on oil selling for over $75 a barrel. Now that it’s trading at about $50 a barrel, there’s $25 missing from every barrel sold.


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How Cheap Oil Could Wreck the Economy

Since the crisis of 2008-09 about one-third of capital spending by S&P 500 companies went into energy. And as much as 20% of the high-yield market (junk) now is concentrated in the energy sector.

That boom was built on low interest rates and a high oil price. Without cheap money, cheap gas wouldn’t be possible. And when gas gets too cheap, the cheap money suddenly gets very dear.


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Don’t Bet on $70 Oil Lasting Long

Outside of the big oil exporting countries and the US shale-oil business this big drop in prices is widely seen as good news.

Consumers fill their tanks at lower gas prices and have a few bucks left over – money that can be used to buy things. According to the current and conventional delusions of the economic profession, this leads to sustained higher economic growth, more jobs and a cure for impotence.