Friday, November 13, 2015

Economy: Oil Price - Power To The People

(Drivebycuriosity) - The price of oil is drifting lower again. This morning Brent Crude, the international gauge for the energy commodity, is traded @ $44.60. A reason to cheer? Wall Street  doesn´t think so.  Stocks are falling as well. The S&P 500, the gauge for the US stock market, is losing 0.7% in the moment of writing. There is a lot of pessimism and many commentators claim that falling oil prices are spelling doom for the economy.

I think this is wrong. Falling oil prices - which lead to cheaper gasoline - are good for the economy and most of the companies. Consumers have to spend less money for buying gasoline at the pump and for heating (if they use heating oil). Lower transport costs - thanks to cheaper Diesel - translate into lower prices for food and other goods. So, cheaper oil transfers purchasing power to the people (consumers).

This morning we learned that US retail sales (ex-gasoline) gained  4.1% YoY in October (calculatedrisk). I expect that we will get a solid holiday retail season in the coming weeks thanks to cheaper gasoline (which costs about 30% less than last year same time fuelgaugereport).

Power to the people!

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