Is everybody happy? With crude oil prices down some 25 percent since June, filling up at the pump has become a bit less painful. And with winter coming on, lower fuels bill will bring welcome relief.
The talk on the Street is that money not spent by Americans on fuel will fuel retail sales. However, with good jobs scarce, wages stagnant and median household income in the dumps, for a nation mired in trillions of dollars of credit card, auto, school and mortgage debt, the money saved on fuel will, at best, only slightly heat the tepid economy. The same holds true for much of the world. That’s the good news!
The bad news is recession/depression for scores of energy-producing nations whose GDP rises and falls with gas and oil prices.
Simply put, oil prices are down because supplies are up while a global economic slowdown grinds away. Yes, greater production of natural gas and oil are a factor in lower oil prices, but the downward spiral of key economies across the globe plays a greater role in driving prices down.
In oil-rich nations where the people are poor (Venezuela, Nigeria, Mexico, etc.) and oil-rich ones where the people are rich (i.e., Saudi Arabia, Kuwait, United Arab Emirates), the lower the prices the louder public dissent.
Be it a “democracy” run by a political party, or a kingdom run by a family, as prices drop, economies shrink and jobs are lost, the “prols” will turn ugly: “When people lose everything and have nothing left to lose, they lose it.”