People seem to think that low oil prices are great. While we all love paying less at the pump, and it does have a ripple effect throughout the economy in the form of lower relative cost of goods and services, the energy sector is suffering. Thus far, oil companies are closing, energy related companies are doing the same. Host communities are losing jobs and the stock market is down significantly due to oil price chaos. This directly affects investors and the entire economy.
It definitely will hurt the economy. The savings at the pump is not getting spent back into the economy. It is simply being used to save money and pay off debt. There will be job losses due to the drop in oil and the stock market will continue to drop. This will hurt the economy. Oil needs to be stable for the economy to recover.
While sharp drops in oil prices may benefit consumers if oil companies pass on lower costs of crude to them, economies that depend heavily on oil extraction and production will suffer from spill over effects in the energy sector. Oil extractors and producers are major employers that provide high paying positions. In addition, they are significant purchasers of services and equipment. Finally, the sharp drop in oil and other commodity prices contribute mightily to global economic stagnation.
The drop in oil prices will not hurt the economy because our economy does not need to depend on oil. There are so many other energy sources that we are working on establishing as useful in our country that oil does not have to be so damaging to our economy. Nuclear power and other clean sources of energy can be used to replace oil and keep our economy strong.