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Oil Price Impact on Markets and Economy
Old 02-12-2018, 08:57 AM   #1
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Oil Price Impact on Markets and Economy

When oil goes down my thinking would be a great thing for the economy. Cost of doing business is less and for consumers it costs us less etc.. I also know that when these oil companies aren't making what they want it isn't good for the markets or economy.

Can someone explain why and how it works for the markets and consumers and the effects we see from the actions of (oil) prices?

I have heard lower price oil is great for markets and economy. I also have read reports low oil prices are not good for our economy and the markets.

I have always seen very mixed theory on the topic.
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Old 02-12-2018, 09:50 AM   #2
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Oil prices are a huge part of every link in just about every supply chain. Higher prices are a drag on the economy which hurts all the workers and all the businesses that contribute to it.
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Old 02-12-2018, 01:25 PM   #3
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My high-level view: oil prices down are a great thing in the long term (cheaper inputs), and can be a negative factor in the short term.

This is because low prices push investment down in the oil industry as well as profits there. The benefits take a while to trickle down the value chain.

Adjustments, even positive ones, take time.
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Old 02-12-2018, 07:14 PM   #4
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Thanks and it does make sense. Too much change either high or low will have the effect on the markets. I'm guessing finding that middle and balance is what we need in oil pricing. It always seems like it is feast or famine or greed and bust.
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Old 02-12-2018, 07:20 PM   #5
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Oil prices had really ramped up over the past year along with the stock market. This was also due to the US dollar dropping - a major factor on oil prices (and dropping dollar also tends to push up US equities). And now with the stock market selling off sharply, oil has dropped below $60 which I think will help economically.

Yes - part of industry does better with higher oil prices, but most of the economy does better with lower oil prices IMO, as long as they aren't so low that it drives unemployment up. We had a little bit of that with the 2015 oil price collapse. But then much lower fuel prices helped keep inflation down for a couple of years.

I was getting a little uncomfortable with the oil price run up and am glad to see it pull back.
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Old 02-12-2018, 10:20 PM   #6
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Either extreme is bad. Like all things, its relative to all the other macro factors in the economy and, of course, what expectations are at the moment. And even then, what hurts one sector helps another.
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Old 02-13-2018, 11:28 AM   #7
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Thanks.
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