The cost of gas falling has been welcome news to a number of different industries across the United States. Many, including the airlines, automakers, farmers, and even tourist destinations are seeing some rather nice benefits from the drop in the oil prices.
Even though it all seems like sunshine and happiness, certain other segments of the country are not quite as pleased about this, and with good reason. The gas and oil producers, particularly those small companies that are struggling with the lower prices, are seeing a decrease in their profits that has the potential to lead to job losses. They do not have the ability to weather the storm as the larger companies do, and some of them are suffering right now because of it. The drop in crude oil prices by about 25% in just the past four months means that these companies are suffering.
This could have a negative effect on the economy, although the savings could induce more Americans to get out more and spend. This is where those aforementioned areas are seeing some gains. Since the cost of fuel is down, the airlines are starting to see brisker business. They spend less on fuel and can pass on those savings to customers. More people fly, and the airlines make more money. With the costs of fuel down, it also means people are more willing to go on vacation, even if they have to drive to their destination. Naturally, this means that tourist friendly destinations will see more people, and thus more money.
Delivery companies, such as UPS and FedEx should also see quite a lot of savings since the price of fuel is low. Cheaper oil can help the farmers as well. The fuel to run their equipment is cheaper, as is the fuel to haul their goods to market. This should eventually mean slightly lower prices in the grocery stores. Auto makers see this as a very good thing as well, since when the price of vehicles is lower, it often means that more people will be in the market for new cars.
Each of those things can help to boost the overall economy. However, it is important to be sure that the prices do not go so low that they undercut the ability of these oil producers to bring oil out of the ground. There is a limit to how low the prices can go before they have a negative effect.
About Oil Works Inc.
Oil Works, Inc. is a complete drilling rig equipment manufacturer and service provider based in the Permian Basin for over 20 years. OWI’s product and service offerings include Masts, Substructures, Drawworks Manufacturing, Mud Systems, Rig Walking Systems, Power Generation, Control Systems, Iron Roughneck Service, Quincy Air Compressors. We are a complete Drilling Equipment Manufacturer and build to API and ISO standards. OWI is also proud to offer 24/7 Service and Support.