The Upside and Downside to Lower Fuel Prices

Rodney Johnson | Wednesday, August 8, 2012 >>


Last year, we published our book, “The Great Crash Ahead.”

We are proud of that work. It serves as a guide to consumers, business owners, politicians… really anyone with a stake in our economic fortunes.

The other day we were updating some of the charts and graphs for the release of the paperback edition this September and I was struck by our forecast for the price of oil and what it might mean for consumers around the world.

Now, to say that I was “struck” by our forecast does not mean I was surprised. It’s our forecast, after all. What caught my attention was the great divide between what we see ahead and what the rest of the world seems to expect…

Our view is that the economic malaise that has gripped the U.S. and the rest of the world for the last several years will continue. In our book, we lay out our case, pointing out what got us here and what it will take to break the cycle, or at least make it more tolerable.

But then we go further…

We highlight many markets – housing, equities, bonds, metals, etc. – and give a likely path in the years ahead. When it comes to oil, the road leads lower… much lower.

We could see this as a good thing. After all, who doesn’t want to pay less for energy?

But it can also be the harbinger of difficult times. Low energy prices would mean either that a large supply has hit the market or demand has plummeted. How about both?

How about the rising use of natural gas and the slumping demand for oil as consumers and businesses adjust to lower and slower consumption? What would that do to the price at the pump?

Lower Prices Give Us Choices

As a consumer, lower fuel prices give us choices. We would no longer be constrained by the nagging need to get a few extra miles to the gallon. So we’d be freer to buy the bigger car that might meet more of our needs.

It might also mean a little relief at the grocery store. All of the goods we consume have at some point been on a truck. Their final retail price is tied in some way to the price of fuel.

In spite of these positives, we can’t ignore the downside to lower fuel prices – slumping demand is the result of weak economies around the globe.

This is what we describe in our book as the Economic Winter Season, and it will be with us for some time. But just like winter, it kills the excess that had grown up in easier times and paves the way for strong growth in the next season.

The best news of all is that when the Economic Winter is finally over, the U.S. will remain as the world’s economic powerhouse, benefitting for decades to come. But to find out why, you have to read the book.

So go ahead, buy that big car. Even if it’s only because gas should be cheaper in the years to come.

And look out for the upcoming release of our paperback in September.


Rodney

 

 

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For full details on the event Harry’s dubbed as the “Safe-Asset Slaughter”… and to ensure you escape the coming carnage, I urge you to watch this special presentation.

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Categories: Economy

About Author

Rodney Johnson works closely with Harry Dent to study how people spend their money as they go through predictable stages of life, how that spending drives our economy and how you can use this information to invest successfully in any market. Rodney began his career in financial services on Wall Street in the 1980s with Thomson McKinnon and then Prudential Securities. He started working on projects with Harry in the mid-1990s. He’s a regular guest on several radio programs such as America’s Wealth Management, Savvy Investor Radio, and has been featured on CNBC, Fox News and Fox Business’s “America’s Nightly Scorecard, where he discusses economic trends ranging from the price of oil to the direction of the U.S. economy. He holds degrees from Georgetown University and Southern Methodist University.