Blog 12: If oil prices drop, how much will that boost the economy?

If oil prices drop, how much will that boost the economy?

    This article discusses the price of oil, and how that has an affect on the rest of the economy. The article states that oil pricing has stabilized, and might be on a downturn. The theory is that with a drop in the prices, the United States economy might see some growth. They state that the growth might not be as significant as many hope, but would still be noticeable. What many people don't think about when the price of gas is a source of conversation is how gas prices affect people outside of their local gas stations. Oil prices raise the price of anything that uses this product. That means that utilities are higher, etc. It also means that people are providing less to the auto industry, because they cannot afford, or do not want to purchase new cars. The theory behind this is not simply that as soon as gas prices are lowered, that the auto industry etc. will see an immediate boost, but is instead that while people might feel more comfortable and have a little more to spend, the state of the economy will not rise greatly, and people have become more cautious and are less likely to simply rush out and make brand new automobile purchases. This article is positive about the state of the economy, and how the United States might see a slight rise, but does make some comments about how gas prices are unsteady, and due to global issues, these predictors might be somewhat uncertain regardless.

    This article is significant to the global economy in many ways that I have discussed in previous blogs. Again, the United States is a big contributer to global spending, and throughout the economic crisis, trade and spending has changed both within the country and outside our borders. People are timid, and unlikely to trust a stabilizing economy without some guarantees that things will take a turn for the worse again. This article also brings up a good point. Any instability and extra tension in the middle east could very well put a strain on the oil business, therefore causing a rise in prices again. The price of oil is something that changes on a daily basis, and cannot always be predicted accurately. This scares people, and has a causal affect on the United States and global economies.

http://www.washingtonpost.com/blogs/ezra-klein/post/if-oil-prices-drop-will-that-boost-the-economy/2012/04/13/gIQACcF4ET_blog.html