Oil is once again making headlines – OPEC can’t agree on pricing, which has led to oil hitting record lows. It seems that every major oil producing country is battling for market share and willing to keep prices as low as they can so they can keep their current customers. The UK’s Telegraph has a unique take on what all of this means
One topic not addressed in the article is the multiplier effect that occurs when US consumers save a dollar at the pump. Instead of saving it, they spend it. The money that once went to OPEC countries to pay for oil is staying in the US. That family that saved $500 over the year as a result of lower gas prices, may have used those extra dollars to hire a painter to paint a room in their house. That painter then turned around and bought something for himself and the multiplier effect continues. According to PIMCO, that dollar saved at the pump will be exchanged about 9 times before it is eventually winds up in a savings account! So, low oil prices may be helping the economy.