By Wayne William Cipriano
Over the last few weeks, how many times have you heard: “The stock market fell again today, chiefly in response to diminishing crude oil prices” or ‘With the crashing price of crude oil, the economy seems to be stuck with no recovery in sight.”?
And crude oil prices have indeed crashed. From well over $100 per barrel to a recent price of less than $42, crudes tumbling price has carried the price per gallon of gasoline at the pump down with it. As I drove through Sparta last week I saw an operating gas station advertising $1.619 per gallon while just across the street in front of a gas station that stopped selling gas a year or so ago there was a sign offering gas for $3.74 per gallon.
Without becoming entangled in economic statistics it is pretty clear to me that money not forked over at the gas station so people can get to work, go shopping, travel for recreation, and power machinery, will be spent on other goods and services. And so, while I will not argue with anyone who calls the depth and breadth of my economic education into question, it will be very difficult for anyone, economist or otherwise, to convince me that falling crude oil prices dragging down the price of gasoline can be economically detrimental for our country.
When you think about it, it is hard to find any part of our economy that will not benefit from those dropping prices. I suppose owners of oil company stocks might complain but how many of these people have not done so well through such ownership that this return to more realistic energy prices is going to seriously hurt them? And I guess there are other forms of energy effecting our economy that are not directly petro-derived, but even those often rely on petroleum distillates for both development and transmission.
Of course, when the dust settles from the discussion of the effect of falling energy prices on our lives there remains the almost inescapable economic “law” that no matter how much we are paid and no matter what prices we pay for goods and services, at the end of the month all the money is gone. Still, though, how can we not generally benefit from paying over two dollars less per gallon of gas leaving some serious money in a guy’s wallet each week?
Can you think of anyone from the office worker commuting every day to the farmer cutting and baling hay, the skilled tradesman to the least trained day-laborer, from the Department of Defense to the Ding Dong Day School who is not benefiting directly from falling crude oil prices and using the extra dollars saved to buy other stuff?
Lowering energy costs can and almost invariable does raise the standard of living for everyone involved. And we cannot depend on lower prices as they tend to bounce around and frequently the rational reasons for that variation are difficult to understand if they even exist. But for any one to state with a straight face that as the price of energy falls the economy is being damaged somehow must be in possession of facts that have and continue to elude me or are operating in a reality that has very little to do with real life.
But I could be missing something. What do you think?