I have been amazed to read many articles by pundits saying lower oil prices are a bad thing. Their contention is based on lower prices are forecasting a major global recession. I have news for them. That is just a guess. If they were smart, they would just deal in the facts…and the facts are simple. Oil prices have plunged…which means gas prices have plunged…which means the cost of energy has plunged…and due to the fact the cost of energy is involved in everything we do, it is a huge expense cut to the consumer and business.
Very simply…a 10 cent drop in gas prices is equivalent to $10 billion staying in consumer’s pockets which potentially gets spent into the economy. Of course, this is based on prices staying down. Due to the fact that prices are down at least 50 cents at the pump in recent months, that is a $50 billion expense cut. This is huge.
There is a reason why retailing stocks have moved nicely in the past few weeks even though past numbers have stunk. The market is looking forward to a better holiday based on gas prices. Look at the charts of WMT and TGT for example. Their recent numbers were blah but the gas price story was good enough to break them out of range. Now add in the expense cut for business. This expense cut adds to the bottom line…especially for companies that are big consumers of gas. Is it any wonder the TRANSPORTS are soaring…especially the airlines.
So when reading about the “opinions” of some that say lower prices are not a good thing, throw out opinion and just look at fact. Nothing bad happens if energy prices come down and stay down…of course, unless you are in the energy business.