Why this drop in oil prices is different
NY Times:
The energy industry is not made up of whiners who look for government bailouts. They usually absorb the losses and become more efficient. That is happening this time too, but in the process many workers are being displaced and that has an impact on the growth of the economy. In fact, The oil and gas industry has been largely responsible for what growth the econmy has achieved under the Obama administration despite Obama's hostility to it.
The reason it is different this time is because now most of the oil used in this country is coming from US production meaning that US companies and their employees are directly effected by the price drop. As is the case in other price drops the refinery portion of the oil industry is doing fine, but those who risk capital to find and produce oil are directly impacted by the reduction which means thousands of people are being laid off and lenders are having to restructure loans. The layoffs mean fewer people buying homes and other products to furnish them as well as autos.
Oil Prices Drop, but U.S. Economy Isn’t Reaping the Benefits
It’s been true for decades: When oil prices rise, the American economy suffers; when they fall, growth improves. But the recent decline of oil prices has failed to deliver the usual benefits.
The energy industry is not made up of whiners who look for government bailouts. They usually absorb the losses and become more efficient. That is happening this time too, but in the process many workers are being displaced and that has an impact on the growth of the economy. In fact, The oil and gas industry has been largely responsible for what growth the econmy has achieved under the Obama administration despite Obama's hostility to it.
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