(By Michael Snyder) This wasn’t supposed to happen. The price of oil was supposed to start going back up, and this would have brought much needed relief to economically-depressed areas of North America that are heavily dependent on the energy industry. Instead, the price of oil is crashing again, and that is really bad news for a U.S. economy that is already mired in the worst “recovery” since 1949. On Monday, U.S. oil was down almost four percent, and for a brief time it actually fell below 40 dollars a barrel.
Overall, the price of oil has fallen a staggering 21 percent since June 8th. In less than two months, the “oil rally” that so many were pinning their hopes on has been totally wiped out, and if the price of oil continues to stay this low it is going to have very seriously implications for our economy moving forward. One of the big reasons why the price of oil has been declining is because the OPEC nations continue to pump oil at very high levels. CONTINUE
USA is Satan ,devil , terrorist state , which attacks other countries , support + promote terrorism
bad news for USA is equal to very very very good news for whole world
This is simply not true. America is an oil economy. Everything is either made from oil (toilet seats, umbrellas, shoes, sports equipment, plastic food packaging, just about everything) or the machines that make the products run on oil/gas. If oil is cheaper, then supply costs are cheaper allowing for more efficient competition to enter the space, driving down consumer prices.
As the price of oil drops, businesses can afford more supply, run more trucks, and product more goods. More production = more jobs = more money circulating in our economy. This is one of the oldest economic principals in existence. This article is trying to convince us that some areas of the US who are dependent on the actual production income are more important than the growth of the overall US market.
Think about oil this way: A farmer has a 10 acre field. It takes 10 people 10 hours to plant the field. It also takes 10 people 10 hours to harvest the field. The value calculation here is 10 people receiving 10 hours of pay. Let’s say they get $10 an hour to keep it simple. That means it costs $1,000 to plant the field. That is the value of the work. Now, let’s substitute labor for automation and oil. That same farmer has a combine that can plant and harvest. It takes 1 barrel of oil to plant the field and 1 barrel to harvest. Barrels of oil cost $20. The cost is now $40 + a combine payment of $500 (loan payments are tax deductible and so is equipment depreciation and he will own the tractor outright in 10 years). This is the farmer model. The same model goes for textiles, clothing, and most goods. The cheaper oil is, the more production we can do in all areas for the same or lower cost = higher profits = more employees = more production = lower prices to consumers. We have an economic upturn in our future!
Why in hell is cheap oil “Bad” for the economy? It reduces everyone’s overhead expenses.