• 11 hours PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 13 hours Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 15 hours Syrian Rebels Relinquish Control Of Major Gas Field
  • 16 hours Schlumberger Warns Of Moderating Investment In North America
  • 17 hours Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 18 hours Energy Regulators Look To Guard Grid From Cyberattacks
  • 20 hours Mexico Says OPEC Has Not Approached It For Deal Extension
  • 21 hours New Video Game Targets Oil Infrastructure
  • 23 hours Shell Restarts Bonny Light Exports
  • 24 hours Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 1 day Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 1 day British Utility Companies Brace For Major Reforms
  • 2 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 2 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 2 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 2 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 2 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 2 days Rosneft Signs $400M Deal With Kurdistan
  • 2 days Kinder Morgan Warns About Trans Mountain Delays
  • 2 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 2 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 3 days Russia, Saudis Team Up To Boost Fracking Tech
  • 3 days Conflicting News Spurs Doubt On Aramco IPO
  • 3 days Exxon Starts Production At New Refinery In Texas
  • 3 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 4 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 4 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 4 days China To Take 5% Of Rosneft’s Output In New Deal
  • 4 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 4 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 4 days VW Fails To Secure Critical Commodity For EVs
  • 4 days Enbridge Pipeline Expansion Finally Approved
  • 4 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 4 days OPEC Oil Deal Compliance Falls To 86%
  • 5 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 5 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 5 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 5 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 5 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 5 days Aramco Says No Plans To Shelve IPO
Alt Text

Oil Prices Poised To Rise In Early 2018

A consistent fall in comparative…

Alt Text

UK Oil And Gas Costs To Rise 100% If Brexit Fails

Brexit negotiators’ failure to secure…

Did Low Oil Prices Actually Hurt U.S. Economy?

Did Low Oil Prices Actually Hurt U.S. Economy?

Low oil prices have provided a windfall to consumers around the world. In the United States, the second largest importer of crude (which was recently overtaken by China), millions of motorists have seen their gas bills plummet over the past year.

The collapse in oil prices since June of last year could result in “one of the biggest transfers of wealth in history,” as the Washington Post’s Steve Mufson put it in a December 2014 article. Oil producing countries like Saudi Arabia and Russia would see their stratospheric export revenues vanish – and oil-consuming nations would cash in. U.S. consumers may wind up with an extra $700 in 2015 due to low gasoline prices. Related: Oil Markets Have Little To Fear From Iran For Now

The head of the U.S. Energy Information Administration said in January said that low oil prices provided a “tremendous positive impact” on the American economy.

But fresh economic data is confounding that projection. The U.S. economy expanded at a meager rate of just 0.2 percent in the first three months of 2015, and that figure could be revised lower, according to the Wall Street Journal. The poor performance can be attributed, at least in part, to low oil prices. Related: A Potentially Massive Win For Fracking In Texas

That is because the U.S. is not just a major oil importer, but also a massive oil producer. The fall in oil prices has inflicted widespread damage on oil-producing states like Texas, Alaska, North Dakota, and Louisiana. If not for severe cutbacks in capital investment on behalf of American oil companies and other related sectors, U.S. GDP would have been 0.75 percentage points higher.

The billions of dollars in slashed investment ripples through all sorts of industrial activity – from manufacturing and heavy equipment, to financial services, commercial real estate and even housing. Related: How Much Longer Can The Oil Age Last?

Oil prices have rebounded quite a bit since March, but how quickly drillers return to the oil patch is unclear. Rig counts continue to decline, having fallen by an additional 11 rigs for the week ending on May 8. Employment in the oil and gas sector is now at its lowest level in more than a year, with 3,300 more positions eliminated in April. Oil and gas jobs have now declined in four months out of the last six.

The muddied economic outcome from the oil bust comes as a surprise. In April, the Federal Reserve Bank of Dallas concluded that “[d]espite the growing importance of the oil and gas sector in recent years, the U.S. as a whole benefits” from low oil prices. That sentiment has certainly been the conventional wisdom as of late, but given the latest macroeconomic data, it may not capture the entire picture.

By Charles Kennedy of Oilprice.com

More Top Reads From Oilprice.com:




Back to homepage


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News