This Is Why Lower Gas Prices May Not Be A Good Thing

What in the world is happening with the price of gas? The daily price of oil is bouncing around like a ball in a pinball machine. There are some predictions it could soon plummet to $40 a barrel.

it could stall much of the shale oil revolution in the United States

While that may sound like a bargain is coming at the pumps, be weary. The forecast suggests a recession is ahead. Additionally, it could stall much of the shale oil revolution in the United States. It could become much too expensive for drillers to pursue fracking. Advantage then returns to producers in Saudi Arabia and Russia. They can extract at a lower cost and it could also push prices again higher.

If a recession is deep enough and prices don’t rise, then the Saudis and Russians also feel the pinch and we get a downward economic spiral.

Short term, lower gas prices are great for you and me. Long term, not quite so much for us and for a healthy world economy.