4 years ago1,000+ Views
“The price of Brent Crude oil has fallen below $50 a barrel for the first time since May 2009” That is scary sentence. At first glance, second glance, and even third glance, most people I know would be jumping up and down seeing this quote. How could they not? This essentially means: It will jumpstart the economy. Economies tend to slow down when production slows down. With the exception of industries such as the IT, the majority of industries rely heavily on fuel, i.e. oil. The cheaper the price of oil, the lower the production cost, which in turn will mean more spendable income on hiring workers, and the ability to sell goods for less. This is an accepted basic econ theory. It will jumpstart consumer consumption. While the effects of energy prices can be debatable, it is pretty accepted that energy prices affect how people spend. Everyone has to spend on oil, and gas (i.e. energy sources). The less they have to pay for these necessities, the more they have to spend on other goods. Furthermore, because energy prices affect the prices of goods, the drop in energy prices tend to mean a drop in goods prices. These things will affect how many goods people consume. So why did I say that this is a scary sentence? Because the reason that Brent crude oil is that there is an oversupply of gas and oil supplies. North American shale producers continue to increase their supply, while OPEC refuses to cut production. This is scary because while global warming continues to be a major problem, the world continues to use more and more oil. And the worst part? It is becoming cheaper to use oil. So what is the incentive to look for cleaner sources of energy?