Page 16 - Flathead Beacon // 1.14.15

16 | JANUARY 14, 2015
FLATHEADBEACON.COM
CHEAP OIL’S NRIPPLE EFFECT
early every American business and consumer uses fuel, but forecasting its cost is a fool’s errand. In 2008, when the price skyrocketed, bullish investors predicted oil would keep rising above $200 a barrel.
Last week it fell below $50 for the first time in more than five years and analysts argue over where the bottom is.
Many will make predictions about future oil prices, and most of them will be wrong. What’s more clear are the potential impacts the price will have on you, our state and our country. Lower gas prices are good for the majority of American consum- ers. The less it costs to fill up the tank, the more money we have in our pockets to spend on other goods and services. Cheaper crude can also correlate with a strengthening dollar, which of- ten means a strengthening economy.
But not everyone will benefit. Eastern Montana boomtowns, which have reaped the rewards of the Bakken oil fields, are brac- ing for some belt-tightening as rigs are shuttered and companies cut payrolls. In North Dakota, the state is revising its budget forecast to factor in declining revenue.
To the north, in Alberta, the government is scrambling to bal- ance its books. Layoffs loom as energy firms’ stocks dive. As the dollar continues to rise, it will be more expensive for Canadians to visit the U.S., which could impact tourism in the Flathead Val- ley. Then again, the drop in gas prices could attract more Ameri- cans to take road trips to Glacier National Park.
Analysts have compared the recent collapse in oil prices to that of the late 1990s, when it sank to about $10 a barrel. Like then, America’s overall economy is accelerating as many other countries, especially those reliant on oil exports, struggle. But even big, diversified economies, such as Germany’s, are barely growing.
That last dip didn’t end well. In 2000, the tech-stock bubble burst and the U.S. entered a mild recession. Now, 15 years later, the world is a far different place. This time, the tech sector is con- sidered less bloated and domestically we produce a lot more oil.
Perhaps the falling prices are, as some economists argue, simply a “supply driven correction” resulting from a glut of pro- duction. Perhaps, in a few months, oil prices will tick up again. Predictions are useless, but determining the winners and losers of cheap fuel is more straightforward.
- Kellyn Brown