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Showing posts with the label oil prices

U.S. Consumer Confidence Rises with Economic Growth

The economies of the world’s nations are on a slow stroll while America has quickened its pace to a leading role as one of the only bright Northern lights for others to follow. Improvement is so significant that GNP has been revised upward from 3.5% to 3.9% ( As cited in CNN Money ). Other nations are increasingly concerned about lower inflation and the potential for deflation. The U.S. is doing so well it may start to raise interest rates in alignment with growth. Americans are becoming increasingly positive about their future prospects within the economy. According to a recent gallop poll consumer confidence rose to -7 which is the highest it has been in 17 months ( Gallop, 2014 ).   The poll is a combination of how people view the economy. According to the poll 24% said the economy is excellent while 30% said it is poor leaving the total balance at -7.  The U.S. economy is also moving forward with some of that growth coming from lower energy and oil costs. Morgan Stan

The Winners and Losers of Low Oil Prices-The Sweet Spot

There are advantages and disadvantages to oil. Some nations will capitalize on lower oil prices while others may see significant economic decline. Those dependent on exports are going to feel the most pain while those important oil are going to find the most benefits. Below is a video on the negative factors of low oil that appears to cover the issue from a shale industry perspective. Oil price has more of a sweet spot that is adjusted as technology, consumption, and production change. The break even point of shale oil is somewhere between $60 and $80 per barrel (As cited in Bloomberg) .  At present prices are between $74 and $80 per barrel; dangerously close to the break even point for shale companies. This of course means less hiring and expansion for this relatively new industry. When oil dips under $80 it puts pressure on international producers. Despite the potential short-term damage to this new industry the general economy grows when oil is in the zone. Where the benefits of

Low Oil Prices are Good for the U.S. Economy

Lately the idea that low gas prices raise economic activity has been in the headlines. At $80 a barrel oil is at bargain basement prices that lower the cost on everything from holiday travel to manufacturing costs. Oil is just one more factor in the total cost versus rewards businesses use to project future expansion and production. Can oil continue to spur the economy? The reason oil has declined is based on four primary factors that include 1.) lower demand during a global slow down, 2.) production by Saudi Arabia, 3.) improvements in American shale oil and alternative fuel developments, and 4) higher levels of efficiency in transportation and equipment. Oil is presently on the market with enough supply as to not demand higher prices. Oil prices impact the global economy but could have a more profound effect on the U.S. which is not only a heavy user of oil but also a reemerging manufacturing center. According to Tom Helbling of the IMF a 10% change in oil prices has a .2% impa