Cheap Oil


The continued stock market “panic” over cheap oil continues to perplex me. When oil crashed in the 90s we had a boom. The increase in supply from fracking and decrease in demand from the struggling Chinese economy that are driving prices down is a great boon for America. The factor inputs to our chemical, materials and agriculture sectors will all drop in costs as will heating, electricity and transportation. Consumer are getting more out of this than any tax handout stimulus package can do.

The US economy is actually moving forward and domestic manufacturing is strengthening. Too slowly, but still moving. Outside of Houston, the oil glut must be welcome.

There seems to be some concern that the Chinese economy will implode and that would somehow be a problem for America. The reality is that relative to GDP (and to imports) we make virtually nothing selling products to China. In any case, cheap oil is the best thing to prop them up (which is the only downside here, in my opinion).

Further, there is every likelihood the Saudis are on board with this because cheap oil will undermine the rogue oil business in Syria and Iraq that keeps ISIS going. I for one, hope gas hits 99 cents again! (and I drive an electric car).