Price Of Oil Affect The Economy

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How Does the Price Of Oil Affect the U.S. Economy? How does the price of oil affect the economy? Since the middle part of last century, the price of oil has become one of the contributing factors of a countries economic activity. The economist in the United States, state that the price of oil can make a direct impact on the economy. The price of oil has both a direct and indirect effect on many parts of the economy. The price of oil affects the price of gasoline, which in exchange helps the consumer make an impact on the economy. Industries in the United States also feel the effect of the price of oil both good and bad. Oil produced in the United States also has an effect on oil prices, which lead to a direct impact on the trade deficit. …show more content…

The industry sees both profit gains and losses due to the price of oil. The industry sees a rise in consumer spending and thus a larger profit. The airline industry seen a rise in profit from 2014 to 2015, in 2015 the airline industry showed a profit of $19.9 billion and in 2016 they saw a profit of $20.5 billion. Even though the airlines see a profit sometimes the yloose money. In 2015 Delta saw a gain of $1.7 billion thanks to lower oil prices, but lost $1.2 billion to fuel hedges. The rail industry has also seen the effects of lower oil prices. In January of 2015, CSX was charging $0.42 per mile and in February of 2015, they reduced that to $0.36 per mile. The trucking industry may see both long term and short term effect due to the price of oil. With the price of oil falling the trucking industry will be able to be more competitive with the rail industry. In 2015, the cost of a container mile was $1.82 and rail was $0.37 per mile. The long term effect that the trucking industry could feel would be that they can run routes based on effectiveness and not fuel savings, thus making them more …show more content…

One can also now understand how the price of oil has a direct and indirect effect on the United States economy. Not only does the price of oil affect gasoline, it affects many other attributes of the economy. Consumers are saving on average $700 and they are reinvesting about $560 of their savings. Industries, as well as the trade deficit bear the burden of oil prices. With the price of oil lower refiners see a profit increase. Oil Storage Company also see a profit in the amount of $0.60 in just one year. The price of oil is also being affected by the increasing amount of oil being produced in the United States. Both of these are directly impacted by the price of oil for the good and the bad. Oil prices also have a direct impact on how much the United States economy grows and it also has an impact on Gross Domestic Product. The currency rate and the exchange also have a direct impact based on the price of oil. Thus the price of oil has a bigger impact than one may be led to believe. So the next time you are at the pump think about how oil has an effect on everything and everyone around

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