quote:
Here are my brief, quick numbers:
180MM personal vehicles
$3.50 vs. $1.60 gasoline ($1.90 difference)
Avg. fuel tank size 15gals
Average fill-up 10 days
180MM (vehicles)x3.5 (cost)x15 (fuel)x36(fill-ups/yr)=$340MMM in fuel expenditures (this is just personal vehicles)
Same formula but change fuel cost to $1.6=$155MMM
340-155=185
That's $185 billion in new money for the economy. So roughly $1000/personal vehicle.
Now for the lost jobs. What number do you want to use? 200K? 300K? Hell, I'll use 400K (I know it's not that high). With an average salary of $100K.
So... 400,000x100,000=40,000,000,000 or 40 billion...
185MMM-40MMM= 145MMM
$145MMM that isn't going directly into O&G and is being spread out across the economy. This is just using personal fuel consumption. Not including reduced cost of diesel transportation and petroleum based products. As a whole, low oil is great for the economy. Take the Texas rose colored glasses off.
According to the EIA global usage of petroleum is around 94,000,000 bbls per DAY. At just $80 / bbl that's $7,520,000,000 a DAY going into the hands of private companies and governments that own and produce oil. Today that oil instead is selling for $35 / bbl, or just $3,290,000,000 per DAY.
That is $4.23 BILLION DAILY that is not being globally reinvested in infrastructure build outs, industrial contracts, commercial real estate, re-investment in companies for future growth, salaries, stock dividends, and overall stock growth (ie your IRA or 401k). For government owned oil, that is revenue that is not being funneled into government coffers. In Texas that reduction is seen in the plummeting revenues from the states severance tax that is collected on Oil & Gas production. That also relates to tens or hundreds of millions that are not directly funneled into the public universities through royalties being paid by wells on Public School Lands.
I firmly believe that private citizens can spend on gasoline savings doesn't hold a candle to what these companies can spend that leads to further economic growth. X Oil company continually replacing fleets of work trucks moves Detroit's needle. Joe Consumer deciding that his fuel bill getting cut in half and buying something else (while never financially/economically viable) does NOT move the needle in Detroit. When X oil company discovers a new onshore reserve and completes an infrastructure build out in a region they spend hundreds of millions or even billions with ripples that touch countless industries. Offshore drilling rigs are built in shipyards and directly employ thousands. Indirectly they employ 10 fold that. Same goes for production platforms. Both of these cost in the hundreds of millions to just under a billion dollars. Even land drilling rigs take months to build and can directly employ hundreds. A single shale drilling pad will at a minimum have almost 30 people employed and living (housed) on location during drilling alone. That doesn't begin to count the 100+ that will be there for weeks when multiple wells on that pad are fraced. This of course neglects the THOUSANDS of truck loads of equipment and consumables that are brought to that location and the people behind the scenes to create or produce what is loaded onto those trucks.
So go ahead and cut all of that by over $4 BILLION and make up for it when your fuel tank only costs $45 to fill instead of $70.
When Oil & Gas has their primary layoffs the ripples of lost contracts move across a myriad of industries.
