Now below 60 dollars a barrel. Here is my thoughs:

a) Motivate Russia for a war.

b) Reduce prices of a lot of goods in the UK leading to deflation and a lack of consumer spending. This will stagnate the economy, which will not help the National Debt / GDP ratio, motivating more austerity.

c) tax revenues will be way lower from oil companies making less profit, meaning more austerity.

Low oil prices are not good!

Cheaper for people to run their cars so they feel like they have more money – spending goes up while the cost of goods [should] come down.

According to you we should be paying £5/litre for fuel.

You are wrong.

[edit:] You obviously have gas central heating.

Low oil prices are not good!

Live rural and you’ll disagree.

Oil heating/cooking and two cars.

a) Motivate Russia for a war.

b) Reduce prices of a lot of goods in the UK leading to deflation and a lack of consumer spending. This will stagnate the economy, which will not help the National Debt / GDP ratio, motivating more austerity.

c) tax revenues will be way lower from oil companies making less profit, meaning more austerity.

a) I think it’s a dice roll by the USA (and Saudi) to get political change in Russia. Three outcomes, an even more nationalist leader elected on the back of “look what the world is doing to us”, a more outward looking leader that gets sanctions removed, or thirdly Putin relents to the west but remains in power. It’s a very high stakes gamble, but if it comes off we’ll end up with a Russia that we can do business with.

b & c) We’re fairly ballanced on oil import/export so it won’t affect us as positively as it will for example an importer like Germany, or as badly as it will an exporter like Venezuela or Russia. What we lose in the North sea will be made up for in manufacturing.

You seem to be 100% of the opposite view to most.

Whether deliberately or not this is hurting Russia badly. The bravado with ships and planes is just that, if this keeps up Russia is going to be crippled, currency in free fall.
Lower oil prices is a boost to the economy with cheaper fuel and heating bills, consumer spending will rise
Fall will hurt some companies in the oil industry of course but overall its a plus for most businesses

b) Reduce prices of a lot of goods in the UK leading to deflation and a lack of consumer spending.

Surely a reduction in prices means more spending. Only a reduction in wages is bad and that is what we’ve had for the past 6 years.

Surely a reduction in prices means more spending. Only a reduction in wages is bad and that is what we’ve had for the past 6 years.

Deflation often leads to less spending as people are reluctant to buy something that may be cheaper next month

Putin relents to the west but remains in power.

I don’t think he has it in him to back down

No, if prices are falling people only by what they have to as they know if they wait it will be cheaper.

Edit – what he said ^

The Russia thing is a by product of what Saudi is doing. Reduced price is to make certain types (shale/tar sands) of production and smaller producers un-competitive. The low price though will not just hurt small producers it’s hurting major companies (Petrobras etc) due to there high borrowings, this has a knock on effect for many banks (HSBC etc). Also the reduced price is harming countries like Nigeria and Venezuela as there cost of production like Russia’s is very high.

Saudi is not to pleased that the US now has really cheap energy cost (shale etc) that are about a 5th of UK cost. This makes the US a net exporter of energy for the 1st time since the 50’s. It could be looked that as a threat to the middle east if the US does not require oil from that region anymore (this pure speculation on my part). Whatever the reasons, its the Saudi’s who have not reduced production thus undermining the OPEC cartel.

It’s also hurting many companies who supply into the oil and gas industry, even now there a planned redundancies to come. There is a chance major projects will get pulled if the low price continues (below $70/B). This in turn hurts alternative energy technologies as they become un-competitive against oil and helps the naysayer who still think oil will last forever.

It could be a while before we see a return to $80/b, in the meantime enjoy the low price of petrol and Diesel. The tax take will be down significantly for many countries, this will be bad for some.

I could be completely wrong of course.

More importantly.. Will it mean cheaper bike parts?

Deflation often leads to less spending as people are reluctant to buy something that may be cheaper next month

… but they still end up buying ‘it’ at some point, as opposed to higher prices where people simply don’t buy ‘it’ because it’s too expensive.

According to you we should be paying £5/litre for fuel.

That’s exactly what I said

Surely a reduction in prices means more spending.

Would you buy something if you knew it would be cheaper next month?

Lower oil prices is a boost to the economy with cheaper fuel and heating bills, consumer spending will rise

This just isn’t true as the tax take for the government will be hit

.. but they still end up buying ‘it’ at some point,

only for essentials, discretionary spending gets hit hard in a deflationary economy

Would you buy something if you knew it would be cheaper next month

But, given the economy, it might not be. So yes, if I thought the price was a good one for what I was getting, I would buy it.*

*I’m not like most ‘normal’ people.

The lower the better. I’ll spend my hard earned cash on something else. Coke and Hookers maybe.

with cheaper fuel and heating bills,

Anyone bothered to tell the energy companies?

Would you buy something if you knew it would be cheaper next month?

Looks like Christmas is still Dec 25th and black friday was still bigger than ever!