Oil prices

[Geordie_Rob]

***This isn't meant as an econmics post or anything like that. It's something I see as a genuine risk/threat in the future.***

So incase anybody hasn't noticed, oil prices have plummeted over the last 4-8 weeks. It's very welcome getting petrol at a more affordable level again (£1.05 per litre rather than £1.33 I paid just a few months back). It's giving me more cash in my pocket, & soon enough prices of goods should drop as costs to the big stores/manufacturers etc.. go down for importing & transporting them for us to buy like good consumers.

However it's one of the reasons inflation has gone down & is at risk of deflation. Obviously lower prices sound great, but if the govt is getting less of a cut in taxes due to lower prices & stores are reducing prices to under cut their rivals, how long will it be before jobs are cut? Already there's thousands of jobs at risk in Scotland linked to the oil industry. Then the tanker drivers are going to be paid off. Councils will get less cash because more people will get out of work benefits so theyll cut staff. Thousands of new unemployed can't afford to but stuff anymore so retailers cut staff & so on & so on.

I work in the travel industry & less leisure travellers (who are skint now after losing their job above) could mean my employer pays me off & suddenly I won't be able to afford anything. Which is a direct risk to my way of life.

I absolutely hate being taxed to hell, but I'm starting to wonder if this cheap oil lark might be more bother than benefit long term.

What's your thoughts?

[Mortblanc]

Or you can look at it as a boon to the economy with more purchasing power in the hands of the public.

I have made two long road trips since Thanksgiving just because the fuel prices were reduced. Less fuel cost= more go. More go = cash spent along the way.

The last road trip was a two day sprint that included payment for a motel room, 6 meals eaten in restaurants with the daughter's family included in one (equaled a weeks' pay for the waitress) and a large purchase of goodies for the grandkids and kids that came to a tidy sum, helping boost the economy along.

You are not going to see the economy shrink, but expand, and travel will be one of the first things impacted positively.

I am sitting here in a climate where I have not seen temps above zero since Christmas. A nice cruise on a big ship headed for the tropics has crossed my mind several times lately. The cost for me to get too that boat, 900 miles away, is now cut in half due to the reduction in fuel prices.

[Megatron]

Well Rob I wouldn't worry to much..

To much has been made of company's like Perenco laying off etc and to be honest it's making a mountain out of a mole hill.

I worked in oil and gas for a long time and still work offshore in the renewable industry but still have a lot of friends still in oil and gas. The only thing that is happening is that guys are going onto other jobs and contracts.

The fact is while we still rely on oil for pretty much everything you can rest assured that it won't be long before the price goes back up its simple maths.

The population of the planet is rising all the time which means the demand for fossil fuels will keep rising. This drop in price is a blip. With out trying to tell you how to suck eggs, it's all about supply and demand. Just save a bit of money for now because it won't last.

[Geordie_Rob]

MB, indeed it's putting more money in my pocket aswell which I am spending elsewhere. I was just worried about longterm if it led to layoffs & they had knock on effects.

However Megatron obviously has more detailed knowledge of the industry than what I read in the press so having read what he posted above, it's eased my worries a little bit.

[Devonian]

(14 January 2015, 20:39)Megatron Wrote: The fact is while we still rely on oil for pretty much everything you can rest assured that it won't be long before the price goes back up its simple maths.

Exactly.

Be it 3 months or even say 18 months, it won't stay down for long.

I also believe a lot of the factors behind the current low pricing is political, the Saudi's, as the major producer of oil, are happy to allow the price to fall, to damage some of their competitors and the US is also happy as it's seriously damaging Russia's finances and keeping Putin's ambitions in check.