Dec 6, 2014

Cory Diary : Oil Price - Fact Check

Read a few posts and articles on the risk of low oil price. Frankly I am kind of lost. Isn't this will boost economy ? How the world did experts able to "back"trapolate that logic of known condition that economy in recession will have reduced oil consumption thus lower oil price. Therefore in reverse, the current low oil price climate will result in poor economic conditions ?

Let's get back to the fact. Oil price is low today because there is ample supply not because there is lesser demand. That's A WORLD of DIFFERENCE ! We have more purchasing power. We have more saving. And we will travel more ! Is the Oil Companies or vested interests trying to hoodwink our mass media to brainwash our brains ?

Let's do a fact check for the period Year 1986-1996 where Oil Price is in sub US$30 due to ample supply. Despite a small blip due to Black Monday (1987), DJIA jumped 4 times ! STI Roughly 3 times ! by 1996.

10 Years of Stock Prosperity. Enough said.

Cory
6th Dec 2014

4 comments:

  1. Looks and sounda good until you realize:

    1. 1980s oil prices accounting for inflation should be about $100 now.

    2. Lower oil prices leads to lower consumer prices. Presumably. But I don't buy what I don't use. And there is so much I use.

    3. If things are getting cheaper, I don't buy now. I buy later. If I buy later, manufacturers don't make now, they hold production. They hold production, they hold hiring.

    4. Except, jobs data in US is good. Latest report show rises. So people think interest rates rise.

    5. Except, oil lowers prices. So if you raise interest rates, there is negative inflation which what europe is facing.

    6. And some inflation is good (lol watch youtube) which means they need to raise oil prices.

    7. But opec refuses to cut production.

    So how ah?

    Lol muahhahahahaha

    ReplyDelete
  2. As mentioned in my diary. For 10 years stocks market went up in low oil price environment so 1 -3 no hold water. Not sure 4 and 5 are supporting me or yours ? and for 6, Inflation control can be done via interest rate or exchange rate in sg context. And 7 is Good isn't it ?

    ReplyDelete
  3. 1-3 is not about low oil prices. And correlation is not cause and effect. Many other variables abounds.

    4 and 5 doesn't support you or me.

    6 - it is not about suppressing inflation but inducing it.

    7 opec doesnt have your interests or mine at heart. And they sell to different regions at different prices.

    lol

    ReplyDelete
  4. Frankly I am at lost on what are you trying to drive your point at. Help me ...

    ReplyDelete