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Oil: $25 a barrel or $50?

Oil: $25 a barrel or $50?

There is much debate at the moment over where the price of oil should be. Some analysts are convinced it will rocket to $50 or more shortly, while just as many are sure that it will drop back to $25 any time now. Let’s not lose focus on the one underlying issue: Not that long ago oil was trading for over $100 per barrel. Roughly speaking for every dollar the price of oil drops equates to roughly $1 Billion extra that consumers have to spend. So whether oil is at $25, or at $50 there is significant savings for the average American whenever they stop to fill up.

This savings is slowly being translated into higher savings rates, accerlarated debt reduction and more cash available to enjoy. While the lower price has resulted in less employment in the oil industry, ultimately the greater benefit is to the general economy. At either price, the American public wins.

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