Jan 04, 2015
It's true that lower pump prices channel more money into our pockets, but the last I saw was that something like 60 percent of our additional cash is going into paying down debt and into savings. Both are great, but tend to moderate the additional cash we put into consumer spending.
A bigger impact on the economy is what happens in the oil patch, primarily North Dakota, the Permian Basin, and some operations in other states. Nationwide, permits for new drilling have nearly stopped. Low prices are already forcing many smaller higher cost shale firms to scale back or cease operations, and no one knows what will happen to fracking. The ripple effect will probably spread to railroads, truck drivers, hotel maids, waitresses, etc. No one knows how far it will go. Hopefully it will not lead to too much of a downturn, but there is a lot of uncertainty here. Also, we don't know how far Saudi Arabia will go to force all shale out of business, which is certainly their goal..