Great Article on Oil Prices and OPEC

Posted on November 24, 2014,12:40 pm by Trader Dan

I suggest that my readers take some time out to read the following most interesting article in the London Telegraph. Leave it to the British financial press to publish these excellent reads.

http://www.telegraph.co.uk/finance/newsbysector/energy/11245367/Sun-sets-on-Opec-dominance-in-new-era-of-lower-oil-prices.html

No matter how one feels about crude oil, it is a fact that its price has collapsed. Some of this of course is tied to the slowdown in global economic growth, but it is indisputable that it is also tied to the emergence of the US as a powerhouse in crude oil production.

Crude is one of those commodities that impacts nearly everyone one on the planet as energy costs are part of the food we eat, the heating and cooling of our homes, offices and buildings, and the transportation of the goods that we consume. Lower crude prices are a boon to consumers at a time in which wages are relatively stagnant.

Personally I believe lower oil prices have far more impact on the consumer than any QE programs implemented by the Central Banks or interest rate cuts by China. Those assume that lower rates will spur borrowing and thus economic growth but what guarantee is there that just because money is cheaper to borrow, that folks will make a beeline to the nearest bank to do just that?

However, cheaper energy costs are felt immediately by everyone putting more disposable income in the pocket of the consumer and lower business costs in moving goods or in their production.