Is it good for the economy if oil prices drop?

Question

I am not familiar with politics and economics, but with today's news, can the drop of oil prices hurt the US economy? Do the suppliers spike their prices to meet their profits which in turn gasoline companies take it out on us, the people? need some clarity....

Answer 1

I understand your confusion. As a matter of fact, I was just wondering the exact same thing. That is actually how I found your question (I did a Y!A search).

I always thought that it was a great thing - with a drop in oil costs comes a drop in gasoline costs, slowing the inflation problem. However, the media seems to act as if it's a bad thing! Just take a look at this article: http://news.yahoo.com/s/ap/20080716/ap_o...

That whole business is just one big mess of confusion to me.

Answer 2

No, a drop in the price of oil is great news for the economy.  It is not good news for the big oil companies, who have been using government to maintain their monopoly.

If it weren't for government, there would be competition in the energy field.  Competition lowers prices.

Let's abolish the Department of Energy, and get government out of the energy business, and watch the price of oil drop.

Answer 3

its great for us but the government does not want that to happen because then they will get less money

Answer 4

Ah, one sees that greed IS NOT all that good after all; it has limits.  Push a timid dog in a corner and watch him come out biting back.  And in the case of Middle East oil barrel prices, the United States and it's allies all have a well set case of decrying economic terrorism.

These "speculators" are nothing more than Al-Qaida sympatheic jet-setter trash in flashy suits.  They wake up in some 5 star euro hotel, saying "Ahhhh....how great it is to rule the world. Let's see Bush squirm some more!!", pick up a encrypted satellite phone---and hike up the per barrel price.

That's pretty much what is going on.  When they're not chatting up w/ Al-Qaida or price gouging oil prices, they're flying out malicious rumors of the U.S. dollar.  They have their work cut out for them.  They're economic terrorists on the Al-Qaida payroll.  And up to quite recently---they thought they were invincible.

I'm not at all surprised if these speculators are FUNDING Al-Qaida, circumventing the bank account freezes we've already slapped on them.  And Homeland Security, FBI and Interpol all better realize that ( don't be surprised if they already are on the case ).

So....the hunt for these economic terrorists is on.  And evidently, we got leads on who they are and where they are---and there's a sweet price on their heads.

I expect international arrests of these jackals to be forthcoming---putting faces on who these monsters are--and they'll make NO effort to hide their hate for America.

Answer 5

The value of one dollar has gone down recently.  Barrels of oil are priced by the American dollar and since the value of the dollar went down the price of oil has gone up.  Excluding a slight fluctuation of the price of gasoline, if the price goes down then the value of the dollar will go up.  This will give us a stronger economy because the employers have certainly not increased the employees wages to keep up with the inflation rate causing the increase in prices to put a pinch on lower income family's.  In other words the drop of gas prices would suggest that the value of a dollar has increased which will allow Americans to buy more with a dollar.  European and other countries have not been effected like we  have with the gas prices going up.  There countries are run on a different currencies then we are, so the decrease in the value of a dollar would not affect them substantially.

Answer 6

Yes, because energy is necessary to produce other goods and services. It takes roughly a barrel of oil or equivalent to produce $1000 US GDP. As cost per barrel drops, you have a more favorable cost ratio to produce GDP.

Answer 7

if the oil prices drop that means there is.. well more oil and it's less of a demand. that's a great thing.

Answer 8

no the drop to a point is good for the economy it doesn't need to get too cheap though ( don''t worry it wont ) or it wouldn't be profitable for oil companies to drill. the price of oil is set by speculators of whom study world oil supplies and world demand thanks to india and china increase demand and not an increase in supply make speculators nervous about future supplies oil prices are future contract ratesif we would open drilling it ease the stress on speculators therefore lowering price. it would be dumped on the world market and increase supplies.

Oil is like everything else it's not cost. it's what someone is willing to pay for it, and it goes to the highest bidder.

if there's an abundance of Oil than it'll be harder to justify speculating a price higher.

I think I've answered but suppliers don't set the price. speculators do.