Unabashedly Good News...

[Lord Jim]

[Gob]

“The oil market is being redefined by two factors. Firstly, the astonishing growth in US oil production, which is real and dynamic. Secondly, the realisation that the world economy is much weaker that was previously expected so demand is being squeezed,” says Mr Yergin, who also sits on the US Secretary of Energy Advisory Board.

The fall in prices comes at a time when Opec’s domination of the world oil market is being challenged seriously for the first time in more than 30 years by the unexpected and sudden resurgence of the US as a major producer. By 2020, Citigroup estimates that America will be pumping more than 14m barrels per day (bpd) of oil and petroleum liquids, giving it the capacity to export almost 5m bpd, which will transform the energy markets.

[wesw]

rube, you didn t really say the thing about low food prices did you?

[oldr_n_wsr]

From what I remember he said that one of the causes of obesity is low food prices. Of course another result of lower food prices is fewer people will go hungry.
And fewer people will have to choose between eating and staying warm this winter.

[Lord Jim]

From what I remember he said that one of the causes of obesity is low food prices. Of course another result of lower food prices is fewer people will go hungry.
And fewer people will have to choose between eating and staying warm this winter.

Actually, he called it the "most important driver":

Food is too cheap and that is the most important driver of the obesity epidemic

viewtopic.php?f=3&t=12211&p=151307&hilit=food#p151307

Earlier, he started a whole thread devoted to the idea that food is too cheap:

viewtopic.php?f=4&t=11552&p=142848&hilit=food#p142848

Later in that thread he said:

cheap food appears to be a dominant factor

[wesw]

what older said...

[oldr_n_wsr]

Actually, he called it the "most important driver":

My memory was "iffy" so I didn't want to misinterpret. But thanks for the links which assured me I am not on the dimentia bandwagon just yet.

[Gob]

Matt Preston BBC economics reporter...

What's going on?

Well, demand for oil has been falling - because of the eurozone's stagnation, Japan's recession and China's slowdown - while output has been rising, largely thanks to America's shale boom.

So an oil glut has been created, which was reinforced last week when the oil producers of OPEC - to the great surprise of many - didn't cut their output target of 30 million barrels a day.

Anyway, the important point is that an oil price fall represents a transfer of cash into the pockets of consumers, via lower prices for petrol and all goods and services where energy is a big component of the price.

Consumers have a habit of spending this freed-up cash, which then stimulates economic activity and growth.

There are of course losers - the huge oil companies, governments and plutocrats in oil-rich countries, from Saudi to Russia and Nigeria.

But their marginal propensity to spend is less than that of consumers. So the fall in producers' income and profits is less harmful for the world.

What's the net benefit to the global economy of the tumbling oil price? Well, economists estimate that a 40% fall in the oil price, if sustained, would add something over 0.5% to global economic growth, perhaps as much as 0.8%.

http://www.bbc.com/news/business-30273896