Cheaper Fuel means Stronger Consumers
Oil prices continue to fall as economic conditions worsen across the globe. Oil which once topped out at $147 per barrel is now trading at $40 per barrel. Analysts are even predicting that oil will fall all the way to $25 per barrel. This means that gasoline, which was once at $4.00 per gallon will go below $1.00 per gallon.
Low gas prices are great for consumers but in reality are signs of a crippled world economy. Commodities prices, like oil prices, are based on supply and demand principles. Essentially what is happening is that less oil is being consumed on world wide basis. This means that people are not traveling as much as before and basically not consuming as much product as normal. The reality is that very low oil prices are the reflection of a sick economy.
Emerging markets like China are seeing their economy take a big toll because of the United States economy. Therefore, China and other large consumer countries like India are not using as much oil either. These countries rely heavily on exports to the United States. If the United States consumer is not making many purchases then these countries suffer as well. Therefore, less worldwide consumption of oil will continue to drive the price of gasoline lower.
Lower gas prices will actually help the economy recover. People filling their vehicles with gasoline will no longer spend as much money at the pump. Even SUV owners will see the cost of operating their vehicles drop drastically. What once cost $100 to fill with gasoline will cost about $25.00 with $1.00 fuel prices. People will now have more money to pay their bills. Credit cards will be easier to pay as well as home mortgages. Furthermore, the additional monies saved on fuel will also be spent on other items, like clothing and electronics.
However, as the economy recovers, oil prices will go back up. Emerging economies like China and India will start to consume more oil as well as people need to move around more, etc. As the United States consumer starts making more purchases, factories in the United States and other countries will start employing more people and thus consuming more energy. This chain of events will eventually cause fuel prices to rise again with the demand.
Perhaps it is going to be up to the new administration to push for new energy technologies to be developed. Honda has introduced a new car that runs on hydrogen fuel called the FCX Clarity. BMW is also going to be introducing a new hydrogen vehicle as well. Hydrogen fuel should be much cheaper than gasoline. Cheaper fuel will empower consumers to be able to make other purchases. Furthermore, cheaper fuel will also ease the burden that monthly bills create.
As the economy worsens oil prices will go down. As economic conditions begin to improve, oil prices will go back up. The cycle will definitely help the economy recover. However, there is a desperate need for cheaper alternative fuels like hydrogen. The development of new energy technologies will fuel our economy much the way the internet has. The new infrastructure that will be required to service these new fuels will also spark growth in our economy. Lastly, if we spend less money at the pump going back and forth to work, etc, then we will have more money to spend on other things as well.
Oil prices continue to fall as economic conditions worsen across the globe. Oil which once topped out at $147 per barrel is now trading at $40 per barrel. Analysts are even predicting that oil will fall all the way to $25 per barrel. This means that gasoline, which was once at $4.00 per gallon will go below $1.00 per gallon.
Low gas prices are great for consumers but in reality are signs of a crippled world economy. Commodities prices, like oil prices, are based on supply and demand principles. Essentially what is happening is that less oil is being consumed on world wide basis. This means that people are not traveling as much as before and basically not consuming as much product as normal. The reality is that very low oil prices are the reflection of a sick economy.
Emerging markets like China are seeing their economy take a big toll because of the United States economy. Therefore, China and other large consumer countries like India are not using as much oil either. These countries rely heavily on exports to the United States. If the United States consumer is not making many purchases then these countries suffer as well. Therefore, less worldwide consumption of oil will continue to drive the price of gasoline lower.
Lower gas prices will actually help the economy recover. People filling their vehicles with gasoline will no longer spend as much money at the pump. Even SUV owners will see the cost of operating their vehicles drop drastically. What once cost $100 to fill with gasoline will cost about $25.00 with $1.00 fuel prices. People will now have more money to pay their bills. Credit cards will be easier to pay as well as home mortgages. Furthermore, the additional monies saved on fuel will also be spent on other items, like clothing and electronics.
However, as the economy recovers, oil prices will go back up. Emerging economies like China and India will start to consume more oil as well as people need to move around more, etc. As the United States consumer starts making more purchases, factories in the United States and other countries will start employing more people and thus consuming more energy. This chain of events will eventually cause fuel prices to rise again with the demand.
Perhaps it is going to be up to the new administration to push for new energy technologies to be developed. Honda has introduced a new car that runs on hydrogen fuel called the FCX Clarity. BMW is also going to be introducing a new hydrogen vehicle as well. Hydrogen fuel should be much cheaper than gasoline. Cheaper fuel will empower consumers to be able to make other purchases. Furthermore, cheaper fuel will also ease the burden that monthly bills create.
As the economy worsens oil prices will go down. As economic conditions begin to improve, oil prices will go back up. The cycle will definitely help the economy recover. However, there is a desperate need for cheaper alternative fuels like hydrogen. The development of new energy technologies will fuel our economy much the way the internet has. The new infrastructure that will be required to service these new fuels will also spark growth in our economy. Lastly, if we spend less money at the pump going back and forth to work, etc, then we will have more money to spend on other things as well.
Labels: alternative fuels, cheaper oil, credit cards
Credit Card / Financial news blog post by Todd Holliday at 8:58 PM 