Oil

Reading Time: < 1 minute Oil prices have dropped about 22% last month (or 33% from the Oct. 3rd peak to around $51/barrel for U.S. crude oil futures)The benefit is that consumers don’t have to pay as much at the pump. Average prices at the pump are falling at the fastest rate in 3 years, according to fuel tracker GasBuddy. (down about 31 cents a gallon compared to a month ago)Falling oil prices used to be a bigger boon to the U.S. consumers but are not as effective today. (I.e., in 1972, it took 1.1 barrels of oil to produce ~ $1k of GDP, and now it only takes 0.4 barrels)Extraction techniques have changed from using large debt-free companies (Exxon, BP) who didn’t have much debt, to now using smaller debt-laden companies. Therefore, the lower oil costs may drive these smaller companies into bankruptcy, or prevent them from wanting to make further investments into energy, which can hurt the economy.The trend in net export levels has been declining for over a decade so domestic demand is waning and putting downward pressure on global prices (in addition to the most obvious, that the global economy is hovering at below-trend growth ever since the Great Recession.)