How low oil prices slowed the US economy
It all started with fracking. When President George Bush signed the Energy Policy Act of 2005, hydraulic fracturing – a way of recovering oil and gas from shale rock – became exempt from the Safe Drinking Water Act, and fracking exploded.Imagine how much worse it may get if Big Green can further inhibit the growth in the energy economy. Their push for inefficient alternative energy will hurt consumers and the poor will be hardest hit.
The industry created millions of jobs and millions of barrels of American-produced oil. But with the U.S. creating so much homegrown oil, the global price of crude began to tumble. Faced with decreased revenue, oil-producing countries made up for lower prices with more volume, driving prices still lower.
Lower crude prices drove pump prices down to about $2.50 a gallon from nearly $4 in 2014. But instead of boosting GDP, as historically happens when gas prices fall, U.S. gross domestic product fell.
The reason? Falling profits forced oil companies to lay off hundreds of thousands of workers and cut capital expenditures on things such as trucks, drills and other infrastructure. Because three of the nation’s biggest companies are oil producers, their reduced spending can drag down the entire economy.