What would happen to the economy if all people who had stocks and shares in oil dumped them?

Question

just wondering what percentage of the public is invested in oil? and what would happen if they all stopped

Answer 1

If this were to happen the stock market would drop and everyone would bow out of there stock (regardless of what it is in) and we would go into another great depression. It would be ten times worse than what it is now! The best way to lower oil prices and bring back up the economy is to call your local senator, representative and flood capitol hill will phone calls, emails and letters pushing the government to drill in america for oil. If we as americans decided to truly stand against the arab oil giants and use the vast amount of resources we have in our own country then our economy would sky rocket. We are making ourselves look like pansies beacase of this c**p we are letting happen. We NEED to stand up for ourselves, and not be intimidated by the government here and overseas. Mexico and Canada both have vast oil reserves and are obviously very close to america. if our lazy government decided to get up and make friendships with these countries our economy would get in place. We continue to blame the government for our problems. Americans need to stand up and TELL the government how we want things done. This is a country by the people, and for the people.

Answer 2

First of all your premise is a little silly. If EVERYBODY dumped their stocks, there would be nobody to sell them to. And if a bunch of fools out there decided to do that, I would be first in line to buy the cheap shares caused by the silly action because no matter what the short term price of the stock, the oil companies are going to make a lot of money meaning the stock price would eventually rise.

It sounds like you would like to see the price of oil come down. If you want to do that, there are two things you need to do. First, use less oil. Get a smaller car, use public transportation, drive less, turn down your heat at home, turn off your lights, buy those fluorescent bulbs. And second, vote for politicians who will vote for more drilling in the US. That means voting against Barack Obama and any other Democrat for that matter. Good luck.

Answer 3

Not much would happen to the oil problem since it is a world wide market, and not just the US.

Selling stocks would not effect the oil companies in the daily operations and or functions.

If not one every invested in another oil stock, it would not change on thing as far as the drilling, production, shipping, processing or selling oil

If everyone sold their oil stock, you'd weaken every 401 and retirement plan in the country.  Only the poor would suffer, the middle class and the rich would re-invest into something else

You want to solve the oil crises, or the gasoline problem, get the government out of it, they want to run our lives and have no understanding of what they are doing

The Liberals are preventing the United States to become independent of foreign oil.  Other than raise taxes, the Liberals have offered no sound realistic solution

Remember when you go to the voting booth, do you want big government or big problems

Answer 4

This cannot happen, because for every sale there needs to be a buyer. If everyone wants to sell and nobody wants to buy, then you have no choice but to watch you investment's value fall.

Answer 5

Oil trades on the futures markets.  Oil companies issue shares of stock.  Obviously, as the price per barrel of oil rises ($100 at the beginning of the year, today $145) they tend to do well (revenues and profits). (exception being refiners, as they use oil as an input cost, and oil has risen faster than gasoline).

Mutual funds and hedge funds own alot of the shares of the respective companies.  Recently (last 2 days) oil prices have gone up while the shares of these companies have fallen.  Why, investors take profits...

If oil prices per barrel go down it is a positive for the economy (gas, diesel will fall accordingly).  Also think about the impact of oil on things such as plastic and chemicals, and any sort of transportation of goods.

The reality is that oil is going up due to the emerging economies such as China and India using more and more of the product.  They consume more now that they have more wealth and their emerging middle class wants the "western" or american life....cars, well furnished homes, meat based diets etc.

The losers if shares of oil companies sold off would be those invested in those shares through investment vehicles.  Mutual funds except "sector funds" are diversified so they would take a hit on those oil co stocks, but in general other investments that are taking a hit due to higher oil prices would offset.

Hedge funds and institutional investors chase performance.  Whatever is doing well, they invest in.  Commodities such as oil are doing well so they continue to invest.  Once the trend reverses they will look elsewhere... beaten down consumer, retail and financial stocks.

Basically, energy (oil) is here to stay.  It will take years to develop alternative energy in a viable form and alternative to fossil fuels.

Answer 6

The Stock Market would definitely Crash, no doubt about it. Similar to the Stock Market crash of 1929.

Except that if the stock market were to crash today it would be at least 40 times bigger than the stock market crash of 1929.

& If the stock market were to crash today, Our Economy very soon afterwards it would definitely go into another Great Depression.

Maybe it would be called the Great Depression 2.

Answer 7

People do not have shares in Oil, as oil is not a company. People either buy futures contracts (but do not take delivery, they just keep rolling them over monthly) or they buy stock of oil-related companies such refineries (but I do not think this is what you mean). There is also another alternative, which is that people buy shares of mutual funds or ETFs related to an oil index, and these funds (like the one run by Goldman) take the money and buy futures contracts (and keep rolling them).

So, your question is what will happen, if people (you mean individual investors and other traders who are not interested in taking delivery, right?) stop rolling over their future contracts or dumped their shares in oil-related ETFs?

Well, I would guess oil prices would tank a lot. The majority of oil future contracts do not reach maturity (so investors are not interested in oil). This will drain much of speculation from the oil market. It will also drain much of the liquidity of the market.

It is not necessarily good though. There are some traders in the markets (especially banks) that are considered economic players on the commodity markets by the CFTC although they are not interested in taking delivery. These so-called traders are often behind speculative trend but they also provide the necessary liquidity for the market. If you want to forbid this banks from trading, oil prices will go sharply up (I think) because liquidity will disappear and the market size will shrink and buyers and sellers of oil will find it much to "meet" each other. Keeping banks playing in the market (and you should know how these "amoral animals" think and behave) they will soon find a way to get more people on board, driving excessive speculation one more time.

If you drive all speculative investors out of the oil market, you should expect to see another bubble forming elsewhere, maybe gold (not big enough, and central banks would not appreciate it much - for some "burgular alarm" reason). The speculative money that went into oil, is a scared one. Scared of the inflation (bonds return less than rate of inflation, this is why the money did not rush there as they should've done). And scared of shaky capital markets, quities and bonds (bear market, almost bankrupt banking system, and more downside risk to come because of recession).

There is no good solution from here, just a choice between the bad and the ugly. And government/Fed do not like the bad because it comes first and the best alternative to save their @sses. So you should expect the ugly.