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2 April 2015

A cheat sheet on lower oil prices

By Scott Nyquist
February 2015

Oil prices have plunged, helping consumers but worrying energy-reliant countries and companies. Here’s a cheat sheet on what’s happening and its implications.

A little background: over the past seven-plus months, the price of a barrel of oil dropped from $107 to less than $50. This took prices to 2009 levels and surprised just about everyone. Stock markets do not like surprises, and many global indexes have dropped, adding another wrinkle of worry to an already wobbly global economic recovery. Let’s consider some of the implications.
The good news

For US consumers, the drop in oil prices is excellent. A two-car family that drives 2,000 miles a month might have to buy 100 gallons of gas. With the average price per gallon now $1.25 less than it was at its 2014 peak, that adds up, essentially, to a $125-a-month raise. For American households, spending on gas is on track to be the lowest since 2003.

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