Saturday, November 29, 2014
The Economy - Price of Oil
I bought gas for my car today and was thrilled to find that gas at my closest self-serve station was now solidly below $3 a gallon (here in Southern California). That is awesome for those of us who do a lot of driving and commuting. The price of oil has dropped to about $65 a barrel, so gas might still go down further. Again, great news for all of us who are tired of paying so much for gas at the pump. But, $65 a barrel is a disaster for oil producers especially domestic producers. It turns out that most domestic producers need oil to be at $70-80 a barrel to make a profit. Now they can handle a short drop in price, but if the price stays low for an expended amount of time, then there will be carnage in the domestic oil business. So while I applaud the lower gas process, I am weary of the long term effects of low oil prices on the great paying jobs that have been produced across the country. The fracking miracle might be coming to an end, and that will not be good for any of us.