Please disable your Ad Blocker to better interact with this website.

Image Image Image Image Image Image Image Image Image Image

Affluent Christian Investor | May 25, 2022

Select a Page:
Select a Page:
Scroll to top

Top

Email Featured
No Comments

What Do Oil Prices Tell Us About The Global Economy?

Oil prices aren’t everything in economics, but they can be a useful indicator for the broader economy. Oil is, in part, a growth commodity — one that can be used to make other commodities more valuable. Oil and its derivates power vehicles that we use to turn crops into food, planes, and ships that transfer that food to markets, where people use gasoline to get to the store and drive home. Manufacturing, infrastructure, food; these are all, to some degree or another, dependent on oil. This excerpt from a VisualCapitalist[i] report illustrates the problem we find ourselves in:

(Source: VisualCapitalist)

Or we could take a look at Statista’s report[ii]:

“The coronavirus outbreak has sent U.S. oil prices tumbling to their lowest level for two decades. With much of the world on lockdown, fleets of airliners have been grounded while cars are parked up, resulting in a lack of demand. That has in turn led to a glut of oil that’s clogging up storage facilities, further impacting the price.”

While oil prices might not indicate economic catastrophe, that doesn’t mean investors have nothing to be worried about. Yes, oil prices do not correlate as strongly with growth as copper does, for instance, but we still saw a fairly high correlation between growth and oil prices, as we can see in this chart below:

(Source: Bowyer Research)

We’re in a situation in which the economic shutdown has propelled oil prices down significantly. Yes, this situation is unique, and yes, low oil prices do not necessarily indicate future economic catastrophe. But investors are not necessarily unfounded in their fears that an unprecedented drop in oil prices could indicate weak market conditions and future economic problems.

[i] VisualCapitalist, How Oil Prices Went Subzero, April 2020

[ii] Statista, U.S. Oil Price Collapses To Lowest Level Since 1999, April 2020

 

 

Originally published on Townhall Finance.

 

Join the conversation!

We have no tolerance for comments containing violence, racism, vulgarity, profanity, all caps, or discourteous behavior. Thank you for partnering with us to maintain a courteous and useful public environment where we can engage in reasonable discourse.

Trending Now on Affluent Christian Investor

Sorry. No data so far.

What We’re Looking At Today

  • Full video: Jordan Peterson on the Channel 4 Controversy and Philosophy of "How to be in the World"
    January 28th, 2018
  • Be Grateful for the Intelligent Design of Your Eyes
    December 23rd, 2017
  • TAX REFORM: The Most Important Things You Need to Know
    December 22nd, 2017
  • What Is 6th Gear? » Intermittent Fasting And Keto
    December 18th, 2017
  • DiscoveryInstitute
    December 7th, 2017
  • The King’s Choice – SAMUEL GOLDWYN FILMS
    October 12th, 2017

    • Follow Us

    Facebooktwitterrss

    Like us on Facebook

    Affluent Investor

    The Affluent Mix

    Become An Insider!

    Sign up for Affluent Investor's free email newsletter and receive a free copy of our report, "The Christian’s Handbook For Transforming Corporate America."

    Send this to a friend