As the chart shows, relatively cheaper oil prices eventually filter down to the pump:
But the industrialized world runs on petroleum, so the effects of relatively less expensive prices will eventually be felt everywhere. What’s not to like, aside from the danger of increased burning of fossil fuels causes planetary disaster? (Oh, that…)
For one thing, the relative collapse in oil prices (Brent was at $125 a barrel in the spring of 2012; today it is trading around $73) is partly tied to increased production in the United States, but also to falling demand.
Economic conditions are poor in Europe, Japan and many developing nations. China is slowing. Also, even though the United States is doing better by comparison, wages are stagnant or falling for most workers.
Commodity prices in general are down. Deflation is a serious concern. So with cheaper oil one economic actor’s win can mean a loss for another, or a long-term loss for everyone.
How is cheaper oil affecting you?
This Week’s Links:
• OPEC’s ‘very aggressive test’ for U.S. shale | Naked Capitalism
• Wal-Mart is seeing its biggest Black Friday protests yet today | Mother Jones
• Sociopaths.com: Silicon Valley’s slippery slope | NY Times
• Obamacare: confusion in high places | Dean Baker
Today’s Econ Haiku:
As you shop and drop
Don’t forget local retail
Push it in the black
I invite you to follow me on Twitter, @jontalton