Support NeoGAF

[foxuzamaki]

Just tell me when the drop is so I can go to the gas station

 

[Hero]

It depends and is somewhat complex. It is immediately good for most people because that is more money in their pocket for food, bills, and discretionary spending. However, it is bad for oil businesses and the regions that depend on the oil business for jobs and tax income. Both ends of the spectrum can affect the economy.

Texas for example has lost tens of thousands of jobs due to cheaper oil. Those are all people who are no longer paying taxes and who may be receiving government benefits in some form or another. Fortunately, Texas has a pretty diverse economy even within the energy sector (natural gas, solar, wind, fracking, etc) so the state as a whole has not been hit too hard and the void has been filled by other industries growing (IT, import/export, healthcare, defense, agriculture, and entertainment and tourism) and moving here. However, all those people who have lost their job probably don't think cheaper oil is good. Neither does the city of Houston which may be in a recession specifically because of the decline in the price of oil.

Hey, no question is stupid and you asking to get more information to get more informed does not make you sound stupid, if anything it proves otherwise.

So I'll give you some answers in the background of Canada, a non OPEC country that produces oil.

While lower oil prices might mean you as an individual can buy more gas and drive around more, it has a bad effect on the oil industry here and those people that work in that field. The reason gas is cheap is because it's being over produced by OPEC countries where it is cheaper to produce to begin with, and they are flooding the market. It cost much more to produce oil here, so companies start slowing down or stopping production here because the price to produce compared to what they make back for it is not financially viable. This means they need less people to work and then that causes people to lose their jobs.

Canada has a lot of the economy tied to oil industry because our former conservative governments thought that was smart, so when it suffers, our economy falls and our dollar takes a hit. When our dollar is weaker prices for things go up, so any money you were saving from cheaper gas in your car, you're going to be paying that back in things you end up buying to survive.

Oh and people losing their jobs means they can't buy as many things as before so that's how other industries are affected

Gotcha, that totally makes sense now. Thanks for the information!

 

[silentspork]

In North New Jersey the gas prices dropped about $.30 in a day or so.

I noticed similar in Flemington area, crazy drop. It would be under $2 again if not for the gas tax increase.

 

[Lord Error]

Not in Canada. When the price of oil drops, the refiners get to widen the 'crack spread' to make up some of their losses with the retail gasoline side of their business. In Canada, when oil goes up, gas goes up. When oil goes down, gas goes up. Consumers here don't catch a break.

Not just that, but when the oil goes down, the prices of everything else eventually go up here, because Canadian Dollar weakens.

 

[SugarDaddy]

Great. We def need more oil rigs. Fuck any land at all, just build rigs everywhere so we can make enough oil to turn the whole planet into a giant engine and drive it into the sun