• 3 minutes "Biden Is Running U.S. Energy Security Into The Ground" by Irina Slav
  • 6 minutes How Far Have We Really Gotten With Alternative Energy
  • 9 minutes "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 2 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 9 days 87,000 new IRS agents, higher taxes, and a massive green energy slush fund... "Here Are The Winners And Losers In The 'Inflation Reduction Act'"-ZeroHedge
  • 8 days Energy Armageddon
  • 1 day "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 3 days "Forget Oil, The Real Crisis Is Diesel Inventories: The US Has Just 25 Days Left" by Zero Hedge - 5 Stars *****
  • 4 days "The Global Digital ID Prison" by James Corbett of CorbettReport.com
  • 4 days "Europe’s Energy Crisis Has Ended Its Era Of Abundance" by Irina Slav
  • 1 day Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 4 days The Federal Reserve and Money...Aspects which are not widely known
  • 22 hours Is Europe heading for winter of discontent with extensive gas shortages?
  • 5 days Goldman Betting on Cryptocurrencies
  • 8 days Сryptocurrency predictions
  • 13 days Putin and Xi Bet on the Global South
Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Premium Content

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:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News