Why is cheap oil prices negative to the economy

[SunTrader]

Supposedly the Eccles building has a huge basement.

But the question is, do they have a yuuuuge one?

 

[Amun Ra]

Why is the world concerned about cheap oil prices affecting the economy? Wouldn't cheaper oil prices be beneficial for the economy? Or is this related to oil nations unable to produce oil at a low price therefore strangling the supply of oil?

Because the economy is made up of buyers and sellers, not just buyers.

 

[padutrader]

China, Japan, India... all the oil consuming nations are laughing all the way to the bank. Now we have to pay them to buy our oil?

but consumers in India are crying ....prices are the same in the retail pump

 

[LiquidBlue]

For net exporters like the US, Russia, etc it’s a bad thing.


Also, if prices stay long for much longer, oil companies will go bankrupt left and right. Then oil will skyrocket when the economy resumes and there’s no production.

I was about to write something like this.

 

[Pekelo]

Certain wells can not be shut down. It is possible for the well to collapse and never reach its previous output level, it happened at Mexico's largest oilfield because of mismanagement.

I can see tankers "leaking" and oil just let ran out in the desert directly from the wells.

 

[1957may10]

Certain wells can not be shut down. It is possible for the well to collapse and never reach its previous output level, it happened at Mexico's largest oilfield because of mismanagement.

I can see tankers "leaking" and oil just let ran out in the desert directly from the wells.

Sure, however fracking wells could be shut down and then open with no issue.
At least some small advantage with all other disadvantages.

 

[Pekelo]

Here is a more complex explanation:

https://www.reddit.com/r/path%3D%252Fr%252Fwallstreetbets%252Fcomments%252Fg54xbt%252F

 

[ironchef]

Here is a more complex explanation:

https://www.reddit.com/r/path%3D%252Fr%252Fwallstreetbets%252Fcomments%252Fg54xbt%252F

https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(United_States)

As of March 6, it has 162 million barrels of unused capacity. USG can make some money taking the inventory and store it. $40 a barrel or $6.5T dollars, enough to pay for all of the stimulus funding, save the oil workers' job....

 

[murray t turtle]

For net exporters like the US, Russia, etc it’s a bad thing.


Also, if prices stay long for much longer, oil companies will go bankrupt left and right. Then oil will skyrocket when the economy resumes and there’s no production.

%%
Maybe;
but for oil co buyers, TX, OK realty buyers, gasoline consumers,big oil with cash=maybe a good thing.Hard to believe XOM was once one of the largest cap companies??????????????????????????????

 

[ironchef]

Here is a more complex explanation:

https://www.reddit.com/r/path%3D%252Fr%252Fwallstreetbets%252Fcomments%252Fg54xbt%252F

https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(United_States)

As of March 6, it has 162 million barrels of unused capacity. USG can make some money taking the inventory and store it. $40 a barrel or $6.5T dollars, enough to pay for all of the stimulus funding, save the oil workers' job....

Sorry, I didn't understand oil futures, 1 contract is 1,000 barrels. Still that would be $6.5 B dollars for USG.