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Why The Damage To The Economy Caused By The Oil Crash Is Going To Get Progressively Worse

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Oil Price Crash - Public DomainWe are really starting to see the price of oil weigh very heavily on the economy and on the stock market.  On Tuesday, the Dow was down 291 points, and the primary reason for the decline was disappointing corporate sales numbers.  For example, heavy equipment manufacturer Caterpillar is blaming the “dramatic decline in the price of oil” for much lower than anticipated sales during the fourth quarter of 2014.  Even though Caterpillar is not an “energy company”, the price of oil is critical to their success.  And the same could be said about thousands of other companies.  That is why I have repeatedly stated that anyone who believes that collapsing oil prices are good for the U.S. economy is crazy.  The key to how much damage this oil collapse is going to do to our economy is not how low prices ultimately go.  Rather, the key is how long they stay at these low levels.  If the price of oil went back to $80 a barrel next week, the damage would be fairly minimal.  But if the price of oil stays at this current level for the remainder of 2015, the damage will be absolutely catastrophic.  Just think of the price of oil like a hot iron.  If you touch it for just a fraction of a second, it won’t do too much damage.  But if you press it against your skin for an hour, you will be severely damaged for the rest of your life at the very least.

So the damage that we are witnessing right now is just the very beginning unless the price of oil goes back up substantially.

When the price of oil first started crashing, most analysts focused on the impact that it would have on energy companies.  And without a doubt, quite a few of them are likely to be wiped out if things don’t change soon.

But of even greater importance is the ripple effects that the price of oil will have throughout our entire economy.  The oil price crash is not that many months old at this point, and yet big companies are already blaming it for causing significant problems.  The following is how Caterpillar explained their disappointing sales numbers on Tuesday

The recent dramatic decline in the price of oil is the most significant reason for the year-over-year decline in our sales and revenues outlook.  Current oil prices are a significant headwind for Energy & Transportation and negative for our construction business in the oil producing regions of the world.  In addition, with lower prices for copper, coal and iron ore, we’ve reduced our expectations for sales of mining equipment.  We’ve also lowered our expectations for construction equipment sales in China.  While our market position in China has improved, 2015 expectations for the construction industry in China are lower”

We also learned on Tuesday that orders for durable goods were extremely disappointing.  Many analysts believe that this is another area where the oil price crash is having an impact

Orders for business equipment unexpectedly fell in December for a fourth month, signaling a global growth slowdown is weighing on American companies. Bookings for non-military capital goods excluding aircraft dropped 0.6 percent for a second month, data from the Commerce Department showed. Demand for all durable goods − items meant to last at least three years − declined 3.4 percent, the worst performance since August.

Let’s keep an eye on the durable goods numbers in coming months.  Usually, when the economy is heading into a recession durable goods numbers start declining.

Meanwhile, a bunch of other big companies reported disappointing sales numbers on Tuesday as well.  The following summary comes from the Crux

Microsoft lost 9.9 percent as software-license sales to businesses were below forecasts. Caterpillar plunged 7.3 percent after forecasting 2015 results that trailed estimates as plunging oil prices signal lower demand from energy companies. DuPont Co. dropped 2.8 percent as a stronger dollar cuts into the chemical maker’s profit. Procter & Gamble Co. and United Technologies Corp. declined at least 2 percent after saying the surging greenback will lower full-year earnings.

What the economy could really use right now is a huge rebound in the price of oil.

Unfortunately, as I wrote about the other day, that is not likely to happen any time soon.

In fact, a top executive for Goldman Sachs recently told CNBC that he believes that the price of oil could ultimately go as low as 30 dollars a barrel.

And hedge fund managers are backing up their belief that oil is heading even lower with big money

Hedge funds boosted bearish wagers on oil to a four-year high as US supplies grew the most since 2001.

Money managers increased short positions in West Texas Intermediate crude to the highest level since September 2010 in the week ended January 20, US Commodity Futures Trading Commission data show. Net-long positions slipped for the first time in three weeks.

US crude supplies rose by 10.1 million barrels to 397.9 million in the week ended January 16 and the country will pump the most oil since 1972 this year, the Energy Information Administration says. Saudi Arabia’s King Salman, the new ruler of the world’s biggest oil exporter, said he will maintain the production policy of his predecessor despite a 58 percent drop in prices since June.

Sadly, the truth is that anyone that thought that the stock market would go up forever and that the U.S. economy would be able to avoid a major downturn indefinitely was just being delusional.

Our economy goes through cycles, and every financial bubble eventually bursts.

For example, did you know that the S&P 500 has never had seven up years in a row?  The following comes from a CNBC article that was posted on Tuesday…

Doubleline Capital founder Jeff Gundlach, more known for his bond prowess than as an equity market expert, pointed out that the S&P 500 has never had seven consecutive up years.

Of course, records are made to be broken, and each year is supposed to stand on its own.

But in a market that faces an uncertain future regarding monetary policy, the specter of a global economic slowdown, and an oil price plunge that is dampening capital investment, Gundlach’s little factoid sparked a lot of chatter at ETF.com’s InsideETFs conference in Hollywood, Florida.

Hmm – that reminds me of the seven year cycles that I discussed in my article yesterday.

If the price of oil stays this low for the rest of 2015, there is no way that we are going to avoid a recession.

If the price of oil stays this low for the rest of 2015, there is no way that we are going to avoid a stock market crash.

So let’s hope that the price of oil starts going back up.

If it doesn’t, the damage that is inflicted on our economy is going to get progressively worse.

  • Tim

    “….Caterpillar is blaming the ‘dramatic decline in the price of oil’ for much lower than anticipated sales during the fourth quarter of 2015.”

    I think you meant 2014. :-)

    • MichaelfromTheEconomicCollapse

      Great catch Tim.

      The transition to a new year always gets confusing for me. :)

      Michael

  • Daddyotis

    Keep stackin’ those precious metals: Brass & Lead…

    • nekksys

      Awww… How did you know may favorites???

    • Ultima Choice

      They won’t protect you in a collapse.

      • Daddyotis

        If you weren’t aware, “brass & lead” were a reference to firearm ammunition. If you were aware of that point, and you are still maintaining that this won’t offer protection in a collapse, please expand on why not. By definition, one of the purposes of firearms is to aid in home protection. Why would plenty of ammunition for a firearm not offer protection?? Just so you know, I am aware that a “protective strategy” also includes ample food/water/med preparations as well as barter. community etc preps as well. To me, your short statement is obtuse and inaccurate. Please expand.

        • Ultima Choice

          I was talking about gold and silver etc which won’t hold their value. If you have to use a gun you haven’t planned properly.

          • Daddyotis

            1) Gold & Silver have been stores of value for thousands of years, so I’m not worried about them losing their value.
            2) If you somehow think that you’ve planned well enough to survive a protracted collapse without the protection of firearms, I wish you luck with that . you’ll need it, Friend. However, there is NO WAY that I am naive enough to think that firearms would not be necessary in any sort of collapse scenario.

          • Ultima Choice

            Gold lost value in the last collapse. The gun might be useful on yourself when your food runs out as you can’t eat the gold lol. Why do you guys all sounds the same?

  • Caterpillar makes a butt load of large diesel engines for the drilling industry. The total number of jobs lost may reach one million however just about every corporation knows that the dollar is DOA and I believe they are taking preemptive measures albeit in vain…..

  • FortuneSeek3rz

    As if America has never had a stock market crash? Those who bought the dip in 2008 have earned themselves a handsome profit. You have to keep the opportunities the market gives you in perspective.

    Both Wall Street and Big Oil to moderately sized energy companies has made billions in profits in the last fifteen years. It is nonsense to pretend like crashing oil prices are going to be a “bad” for the economy while completely ignoring those it will be good for. The middle class had DONATED far too much money to excessive natural gas and gasoline prices. It’s time for a refund!

    • jaxon64

      More likely that govts will see this as an opportunity to increase taxes. Then when the prices resume at the $80 to $120 a barrel range, gasoline will be even higher than before–in the long run we lose over this temporary dip/manipulation.
      PS: The climate change cultists want us all living in urban areas and riding bikes, public transit or walking anyhow, so this is a win/win/win for them…increased consumer costs in the long run, increased tax revenue and shut down the evil frackers… it is genius….

      • FortuneSeek3rz

        Hopefully the Republican congress will be enough to obstruct any new gas taxes. Capitol Hill will certainly get an ear full if they do enact ANY new taxes outside of the upper 1%, IMO.

        • alan

          The republicrates are doing what they are paid to do not whats good for us.

      • Priszilla

        Walking is good for your health. And you save fuel costs, parking fee, speeding tickets, road tax, insurance, gastric bypass, diet pills, liposuction, …
        Just wait for Michael s doom article when people get lighter and the diet industry is tumbling.

  • K

    Oil will be staying down a while.The Saudi end game is not only to shut down the oil fracking industry. It is also to make sure the exploration companies collapse, and the equipment they all use is sold off for their debts. All that is happening is useless, if fracking can quickly resume as the prices go up. No for it to be worth the profits they are losing. It only makes sense, if fracking can not be restarted. If you are a bank, and a now out of business fracking company. Came to you and asked for a loan, to restart their business. Would you give it to them? I think you would not. Knowing the Saudis could crash them all over again, if they chose to.

    • FortuneSeek3rz

      Let me see if I can clarify your comments for future readers:

      “Oil will be staying down a while. The Saudi end game will try to not only shut down the oil fracking industry but also to make sure the exploration companies collapse and the equipment they all use sold off to pay for their debts. All that is happening will mean nothing if fracking can quickly resume due to rising prices. It only makes sense for the Saudi’s to keep oil prices low if fracking can not be restarted. If you are a bank, and a bankrupt fracking company came to you and asked for a loan to restart their operations, would you give it to them? I don’t think you would, knowing the Saudi’s could crash them all over again if they wanted.”

      • K

        You will make someone, a wonderful secretary.

        • Mike

          Haha!

        • FortuneSeek3rz

          If you’re hiring when I retire from my current job, I might be interested ;o)

    • XSANDIEGOCA

      Exactly right. I lived through this in the 80s in Texas. It’s Back to the Future.

  • Mike Smithy

    Now everybody sing along with this Joni Mitchell remix.

    “Iv’e looked at the DOW from both sides now
    both north and south and still somehow
    it’s frauds illusions I recall
    I really don’t know the DOW at all.

    Blood moons and dunes and scamster deals
    I see it every day
    But now it’s just another crony muppet show
    I say they screwed you right out loud.

    Tears and fears and feeling scammed
    I see it every day
    Dreams and schemes and circus crowds
    I look at the DOW this way.

    But now the banksters are acting strange
    they shake their heads and say nothing’s changed
    Well faith is lost and the banksters gained
    in living every day.

    Iv’e looked at the DOW from both sides now
    from win and lose and still somehow
    It’s frauds illusions I recall
    I really don’t know the DOW at all.

    • rmc9

      …that’s really good!!

    • MichaelfromTheEconomicCollapse

      Great comment.

      I love references to classic music. :)

      Michael

    • T.

      Right on. Banksters have Rigged all the markets – Yes especially the price of oil. Why do you think Goldman says they believe oil will go to $30? Cause they’re in on the Rig. Wake up people – You live in a very CONTROLLED environment.

      • Snake Plissken

        heck yeah

    • AzDi

      Excellent!

    • Realist

      I smell a Grammy!

      You just need to digitally sample the distinctive hooks of the original song, put some obligatory hip hop beats behind it, and Bobs yur Uncle! Oh, you might want to get a gold grill before getting in front of those cameras.

      • nekksys

        What’s a Grammy smell like???

        • Elvis Presley

          depends whos touched it and where.

    • El Pollo de Oro

      Another Joni Mitchell classic that Americans will be singing when this ponzi scheme economy goes from bad to much worse is “Help Me.”

      “Help me, I think I’m losing
      My savings again”

      Or this adaptation of Joan Baez’s “Diamonds and Rust”

      “Well, I’ll be damned
      Here comes those angry mobs again
      Robbing my house again”

    • The big wigs totally control the market. There was a clip on the Rachel Maddow show showing a big wig saying as much, right on the tube.” Yes, we could tank the market but we didn’t want to”. That came from the big Switzerland meeting. We need to get info from the bus boys and waitresses, I’ll bet they know some sweet secrets of the rich.

    • Orange Jean

      Love it! Are you sure you’re not from my family?

      How about these 2 renditions of Janis Joplin’s “Mercedes Benz”

      1.
      O-bama, won’t ya give me… a Mercedes Benz
      The 1% have them. I must make amends….

      or

      2.
      Oh Lord, won’t ya steal me a Mercedes Benz
      The “banksters” all have them, I must make amends…

      • or…The bankers have all of the Mercedes Benz cars and 99% of the country’s money too.

    • Stevie Markovich

      brilliant! kudos!

  • John D Gillespie

    Every one wants to blame US fracking for our oil going down in price The fact is oil is a global commodity. Oil is DOWN all over the world. Due to a slow global economy. A bunch of little drillers in North Dakota and Texas did not cause this.

    • Mike Smithy

      In the long run, I suspect that Russia is going to emerge largely unscathed by the drop in the price of crude. The reason is because they are essentially selling their oil and purchasing large quantities gold at artificially low prices with the proceeds. In the end, Russia wins and the USA loses.

      • alan

        Russia has very little debt and lives within its means, America is a debt trail wreck.

        • MadAsHellYankee

          I don’t know about you, but I think it’s utterly hillarious that all the neocons, and all the lefties are actually lining up behind the govt on their Russia stance… not realizing that this currency war was started by a country with a printing press economy. It could have gone on almost indefinitely, but this was a huge game changer.

          Oh wait, Putin invaded Ukraine! Sarah Palin is as smart as Victoria Nuland, and Obamacare is free. Guns are bad, but we have to give exotic weapons to Islamists because of Assad, and Lena Dunham is the most important thing to the weirdo neocon right.

          I hope you appreciate my attempt at humor :)

          • underaged

            Yup Russian has low debt – now ask yourself why anyone would lend them money.
            BTW: Most Russians have no means to live within.

          • Annette Smith

            Lena Dunham is disgusting, imho…

          • MadAsHellYankee

            Whether she is or isn’t…. she is a non issue. Yet when some neocon websites need a distraction because their boys in DC aren’t fulfilling promises, or there is economic bad news… she gets brought out.

          • What do you get when the nationalists and the socialists come together?

          • MadAsHellYankee

            We already have them, the neocons and libs fail to realize how similar they actually are.

          • Mike Smithy

            NAZI’S

    • MadAsHellYankee

      The reason oil is down is due to a currency war instigated by the US government. The end results aren’t going to be pretty.

      • Raven

        The currency wars were set in place when the Pope demanded a new global currency.

  • DJohn1

    Oil is a commodity like just about everything else.
    If a gallon of gasoline is equal to $4 then that is the current exchange.
    If it is $2 for a gallon of gasoline then the dollar just overvalued itself by $2. Because oil basically is a currency onto itself.
    Our Dollar has just picked up value.
    Now take it the other direction. Let us say we pay $5 per gallon. Then the dollar has just devalued against the currency oil.
    So overvalued dollars will cause a depression?

    • Priszilla

      If your currency falls your export industry will benefit. If your currency rises your imports benefit.
      Changing currency values influence the trade balance.

  • They have already covered it. Philippines. Its the country, that would benefit the most, when Oil goes down, Google it.

    Few months back, an American billionaire brought an entire island in Philippines for 2 billion dollars. The construction development in Philippines is so vast that it has over taken China itself.

    All rich people have already moved their assets to Philippines…In next few years. Philippines will be the place to be. Its an Island in the Pacific Rim..I think they plan to destroy the mainland and move to an island.

    • Mike Smithy

      Yes, the Philippines is comprised of over 7100 islands, most Filipino’s speak English, the cost of living is relatively low and they have outstanding medical facilities in Manila and Cebu. As an added bonus, the Philippines is home to some of the most beautiful women in the world.

      • alan

        I was there a few months ago. Way too many people to feed and not enough land to do it. The growing population will be its down fall.

      • underaged

        I would strongly advise anyone to NOT venture out onto most of those 7100 Islands, especially if you are white or Japanese. You will not be welcome – and who can blame them.

        • Mike Smithy

          For nearly 2 years, this Whitey lived on the island of Luzon. All of my interactions with the Filipino people was positive. Unlike the French, the Filipino people are appreciative of the USA’s efforts to liberate them during WW2. However, your admonition is quite correct on the island of Mindanao. A very dangerous place for any non-muslim.

          • nekksys

            I was there myself. Angeles City was a lot of fun. And Smithy, you are certainly correct about the ladies there. Knew quite a few stunners myself. Which base were you stationed at?

            Mindanao, though, is an extremely dangerous place for anyone who isn’t Filipino, Musllim or a missionary. (It’s actually questionable for missionaries but not as dangerous…)

          • Mike Smithy

            I’m a former Marine that was stationed at Subic in the early 90’s. I met my wife of 24 years while I was there. Good times. Cheers.

  • JayC777

    Bwahahahahaha!!!! ROTFLMFAO. Yeah, low oil prices are to blame for an economic crash. This is hilarious on so many levels.

    • Jim Clark

      An intelligent person posting on this site! You don’t see that very often.

  • Genada

    I think the real problem is that there’s not enough money being spread around to create demand for products and services. QE served as a way to inject capital into the system but it all went into things that were not productive in the long term and almost none of the money made it’s way into the broader economy.

    We shouldn’t be hoping for either oil to go up or down, we should hope it meets it’s market price. Right now it’s market price is down due to, too much supply, lack of demand. If oil can be produced at this price and make a profit for the seller, that’s a good thing. The entire problem for our economy and why our recovery has been so poor is due to it being manipulated and distorted. That’s the very reason this is happening, cheap money was poured into something that wasn’t economic, that wouldn’t be able to be done without the cheap money. The solution to these problems isn’t to attempt to distort it more, it’s to allow it to work it’s self out.

    • Mike Smithy

      The trillions spent on QE was nothing more than a gift to the banks at the expense of our children and grandchildren. In essence, QE was a giant transfer of wealth to the oligarchs by hollowing out of the middle class. Recovery for the middle class is impossible as long as nominal wages get hammered lower.

    • Unix

      QE was good you say??? That is a complete whitewash, it has done nothing but distort the markets, it is a bank carry trade. The trillions made out of thin air, bought MBS and TBills, to prop up the banks. They took that money at ZIRP and invested in the equity markets, and made money, which has not made it to main street. So the oligarchs made off with trillions and main st is left holding the bag, via cromnibus bill just passed. Oil is down, so is dr copper, iron, etc, the baltic dry index is at 666 (or was this morning), which means the global economy is shrinking, and producers of oil are maintaining, thus the huge price decline. This move is not revenue neutral, as the loss in jobs will more than offset, the increased spending by having to pay less at the pump.

      IMHO, the game is rigged, and when everyone is rushing for the exits, it will get messy.

  • Priszilla

    I hear that the manufacturers of roulette tables fear the future too.

  • alan

    When ever anything happens there are winners and losers.
    I think in 6 months we will know where this is leading. If lots of oil rigs/platforms go idle for a long time that will be bad. If there is a war there could be shortage and the price go through the roof.

    The economy in general is in very bad shape before these oil shenanigans. The oil price drop just buys the American public some breathing room for how ever long it lasts.

    Consumption has been down for a long time already since at least 2011. I am still wondering where all the extra oil pumped went too?
    And why didn’t the price fall several years ago.

    I still think there is a game afoot and I think Russia is the target and maybe Iran and obviously Venezuela.

  • PhDProfessor

    Isn’t it funny that what’s good for consumers is always portrayed as bad for the economy. Lower prices are portrayed as bad deflation. Lower energy prices are bad for the economy. What about what’s good for the hapless consumer who has seen their wages & incomes stagnate or decline, benefits erode, and standard of living decline? This was all happening long before the oil price collapse and the threat of deflation reared its ugly head. The media seems to be a advocate for the banking elites and corporate oligarchy, ignoring the consumer’s need for lower prices to maintain their standard of living.

    • Jack

      What is going to happen when the oil industry has to mark down the billions of dollars of high priced oil inventory to the current market price? I will tell you.Financial chaos will wreck the global economy.

    • Mike Smithy

      Just like the stupid notion of a 2% target inflation rate is good for the economy. If 2% is good, why not 3% or 5% or even 10%. I don’t know of any consumer out there that is saying, “Gee, I am not paying enough for goods and services. I wish there was something the Federal Reserve could do to reduce my purchasing power”.

      • jox

        That 2% inflation is a magical figure that no one centrak banker cares to explain, and no one politician cares to ask. As you say correctly, if some inflation is good to the economy, why not 5%?

      • Mikki2071

        By the basic definition of money, inflation should be kept at 0. That’s why Thomas Jefferson established the CPI as a means of setting monetary policy back in 1800. The actual from 1800-1932 was -0.08%. 2% “controlled inflation” is BS. Comes from ignoring reality and trying to micromanage everything with the printing press.

        • Mike Smithy

          You are exactly right. Real economic growth is created by economy’s of scale, increased efficiency, comparative advantages and money velocity. Everything the western central banks are doing is smoke/mirrors and parlor games to create the illusion of economic growth. Prior to 1913, the economy of the USA grew with almost no inflation.

        • nekksys

          With real, actual _money_, yes, inflation can only be zero. There can only be a finite supply of actual money.

          Good call…

        • Thin the herd

          inflation is one way the gooberment steals our money, by telling us it is all in the plan, ie: 2% is good or whatever. Of course lately they are just sticking their hands right in our pockets directly (wait until they can’t afford the interest payments on thier 200 trillion $ balloon loan).

          The banksters of course also have their hands in our pocket, wait for the “bail in” folks, of course they own the gooberment, so it all makes sense…

    • Thin the herd

      War is peace…

    • StarFirePrincessWarrior

      Ya think?
      You betcha’!!

  • XSANDIEGOCA

    Enjoy it while it lasts. When the Sauds have squeezed out the competition, prices will rise again. The Sauds control 60% of the market. They can afford to take the long view. They also own us through their investments (2 trillions was the last estimate I read) and can jerk our chain anytime. Why do you think Obama changed his travel plans to go to Saudi Arabia all of a sudden? He was not asked to go. He was summoned!

  • True Grit

    Again with the over priced oil pom-pom dance and I still don’t get it.
    When the tulip bulb price collapsed in
    1637
    was there an economic catastrophe or did
    just a bunch of fools lose the money they paid for over priced tulip bulbs?
    I think banks don’t operate as banks any more, they operate as investment companies and foolishly created trillions of dollars in derivatives on an unsecure future price of oil. Who cares if they get their butts kicked, my garden will still grow.

  • Fireplace 1

    The plunge in oil prices is unmasking what is really going on in Ch1na since their statistics are unreliable. The losses that are suffered due to the drop in the price of oil are offset by gains to other sectors of the economy, e.g. the European economy.

  • underaged

    Darn, and I was certain we were all going to ‘collapse’ from Ebola.

  • bart

    Another article wrote by an idiot keynesian economist ….. falling prices of oil are not damaging to the economy. Damage was done when they went up to high in the first place pumped up by cheap money monetary policy of Central Banks. Now the market is trying to heal of all the nonsense of money creation out of thin air. Caterpillar is blaming the “dramatic decline in the price of oil” for much lower than anticipated sales during the fourth quarter of 2014. Because they were dumb enough to overestimated in the first place and invested to much money in machinery and production. That is called misallocation of capital which happens under phony monetary system. And if it happens to other companies, that would be great too. Market is simply trying to correct all malinvestments that were badly allocated due to artificially low cost of credit and an unsustainable increase in money supply. And guess what …. Central Banks are not going to let this happen, QE infinity is coming big time and as a result dollar is going to collapse ….. when it happens the more dollars you own the more you are going to lose.

    Look at the analogy of the guy who wrote this ……… ” But if the price of oil stays at this current level for the remainder of 2015, the damage will be absolutely catastrophic. Just think of the price of oil like a hot iron. If you touch it for just a fraction of a second, it won’t do too much damage. But if you press it against your skin for an hour, you will be severely damaged for the rest of your life at the very least. ” …….. what an ignorant ? …….. and what if you didn’t heat up the iron in the first place? You could press it against your skin for the rest of your life and it would not do any damage what so ever.

    • Smith

      Bart,
      ABSOLUTELY right! I’ve commented on several of Mr. Snyder’s post and without a doubt he is a Keynesian!

      I think you’ve described the situation perfectly. Cheap oil is GOOD for most Americans. Sheesh, it galls me when idiots spout nonsense like this.

  • Daniel

    Blah blah blah ….. All the oil pigs made money during unrealistic oil highs now it’s time for reality to kick in . bring on the depression . Let’s get it over with . Everybody has been talking about crashes for far to long now . time to bring everybody down a level . To much greed and stupidity out there . Time for some good old fashioned humble pie suffering .

    • Sage

      agree…but unfortunately i think tptb can keep this going forever, honestly how is it still going? and since it is stilll going—-it will go on forever

  • brimp

    Why is it that when oil prices are high, the government buys some to fill up the strategic petroleum reserve but when prices are down, no one mentions the reserve. Wouldn’t be appropriate to buy low, store it in the reserve, then use it when prices go up? If the cost of borrowing money is near zero, this seems like a sure thing.

    They could block up the grand canyon and pump billions of barrels into it.

  • JustanOguy

    When you are a third generation Texan, you know all about the booms and busts when it comes to the Oil industry. Not like it’s anything new and you learn how to take the profits made and hedge your investment portfolio with businesses that thrive with low oil prices.

    How many tens of Billions are being saved by consumers RIGHT NOW with the low prices and are going to be spent elsewhere? (Not like the average American is going to save the money they are saving in fuel costs.)

    Do you really think the savvy investment bankers have never seen this before?

    Figure it out…

    • jaxon64

      yes…we’re all flourishing like never before with that $10 extra a week we save at the pump…sheesh..get a grip

  • Richard O. Mann

    It’s all just rock and roll.

  • Donald Wilson

    Michael at the end of your article you mention slipping back into a recession, hellfire son we have been in a virtual depression since the crash of 2008/2009. If it wasn’t for the trillions of Monopoly money that the federal reserve had been printing under QE1-3 the stock market and the to big to fail banks would have fallen flat on their a**es along time ago. Furthermore, if it wasn’t for the EBT system there would have been nearly 50 million citizens in the streets looking for their next meal (that’s the population of Spain folks). On top of all this we got about 100 unemployed/underemployed/collecting disability/social security and welfare. That leaves about 85-90 million employed paying the tab for all of this, of course this doesn’t include the hundreds of billions borrowed or printed out of thin air. We as a nation are truly doomed…Good Luck and Good Night.

    Bravo Two Zero out

  • Matt thomas

    Yay , we all pray for the destructuion of america but now we have a date

  • Malcolm Reynolds

    Shhhh, you’re going to interrupt the celebration of all those self-righteous libtards out there tooting the Obamaconomy horn.

  • nekksys

    Yeah, I agree. Anyone with half a brain could see this train wreck coming from miles away…

  • jhowell882

    the Dow has only had 3 days of up+ since DEC 31 of last year. finished down 195 today. how much longer can this go on. i say let it crash big time. we will all hurt but the corporations and banks will get hurt, if we don’t bail them out. but then we can get all the willfully ignorant to wake up and then we can get rid of the royalist and build a new economy based on creating things instead of shipping it all over seas.

  • What! Do you guys ever say anything that’s true?

  • Joe Vvc

    Silly it was the high price of oil that caused many sectors to go down and slowdown.

    The current effects are mostly on oil producing countries which form a minority of the countries of the world. Now most people in the world from cities to most remote areas can move cheaper and economic activities will pick up again . It just need some time just as high oil price took some time to kill many countries esp EU countries.

    Fact is the lower the price of energy would be the better not bad.

    .

  • pamela

    Well, in the meantime, those of us in New England can finally afford to heat our homes and drive to work, again. That puts more money in our pockets for purchasing consumer goods.
    The oil companies have, themselves, admitted that they make billions of dollars in profit per quarter. It’s hard for us former middle class to feel sorry for investors when, for the first time in almost two decades, we can finally afford to stay warm in our 0 degree weather without having to choose between food and heat.

    • Overwatch

      Agreed, Pamela. I drive for a living and heat my home with oil. In spite of a recent layoff, I’m doing better providing for my family.

  • Hank

    Does everyone see how ridiculous and stupid the Wall Street crowd and politicians are playing this game?
    Everyone whined and moaned about how expensive gas cost when oil prices were high. (I agreed that gas costs too much)
    Now everyone is whining and moaning about how low the price per barrel of oil is, because it is crippling economies. Well this is what happens when you play with cronyism. And depend too much on foreign oil.
    Let the damn oil industry crash and burn dammit!!!
    Restart it by drilling and depending on our own resources. Look, I know my opinions are not the answer to fix this mess, but the U.S. needs get the hell out of other countries business and start policies that benefits the U.S.
    Stop with the cronyism and get back to honest capitalist business policies.

  • Lars

    This article is just pure B.S. There are other people who play the game of the economy besides giant corporations. Maybe they can start selling to Americans again and recover some of the overseas losses.

  • pkill

    Read Martin Armstrong’s Blog. Now.

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