Dropping Oil Prices? What does this mean to us? - Marvin Germo

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Dropping Oil Prices? What does this mean to us?

By: Marvin Germo | December 3, 2014

What’s happening?

Oil prices have dropped tremendously over the past few months brininging it to its lowest point from the last time I recall. I now get to save 15% per full tank of gas due to this drop in worldwide prices of oil.  Oil was at 144 USD per barrel last July 14, 2008, it’s highest point ever to just around 70 USD per barrel as of this writing!

Who would have ever thought of a day when oil prices would be rapidly declining instead of climbing!  It is expected that by 2015 oil prices would still hover at relatively lowers prices like what we are experiencing today.

Oil Price

What Caused it?

There is just an oversupply of oil around the world!  Believe it or not!  OPEC is producing 30 Million Barrels a day while America is surging and producing 9 Million Barrels of Crude oil a day due to its shale industry.

Based on studies by 2015, the world will just need 29 Million Barrels per day for next year.   Also, because of slowing down economies, like what is happening in China and India they tend to consume less energy.  Which is bad for oil suppliers.

Bottomline there is more oil produced than what is needed and in economics, more sellers bring the prices down.

The Winners

The consuming public – people will have extra money and will spend more on other items.  Which will then push our consumer driven economy yet again higher!  Imagine, instead of spending it on gas it gets spent on groceries and shopping– PGOLD, SEVEN, SSI, CNPF, and URC.  Or on food and shopping  – JFC, MAXS, RRHI, SMPH, and SSI among others.

Tourisim and Travel – It will also be good for travel and will push our tourism more.  Airline stocks will benefit a lot from this as  CEB and PAL will have greater margins over the long term, should this drop in oil prices continue to drag on.  I know a lot of there fuel is hedged but I beleive they will make the right adjustments to make things work better for them.

The Losers

Gas companies – for our listed companies it will be noticable that PCOR, the largest gas company here in the country will take a hit as its margins will be significanly lower.

Traffic – more people would be taking cars now more often than not because of cheaper gas prices.


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