Everyone has noticed the lower gas prices, but determining who stands to win and lose in the sudden drop-off is slightly more complicated. PwC’s UK Head of Oil and Gas, Alison Baker, spoke with Bloomberg’s Tom Mackenzie about the effects of lower gas prices.
The average person on the street paying for gas for his or her car is an obvious winner. Gas prices are currently beginning to stabilize at prices that haven’t been seen since 2009. Baker points out that this means more money in more pockets.
Bus and rail companies similarly stand to gain, but not immediately. Airline costs will also continue to go down with the cost of fuel, meaning cheaper travel.
Baker predicts GDP growth uplift for oil importers as well.
It all sounds pretty good, but many are losing money from the drop in fuel prices.
Among the losers are energy stocks. Baker says, “Clearly the energy stocks have been badly hit around expectations of dividend yields that they are going to need to pay out as clearly cash flows are constrained through a lower oil price.” Companies who supported new technologies and services into energy companies during the Shell boom are also potential losers.
Economies that are highly dependent on oil and gas are also in a fragile situation. Russia, Iran, and Venezuela are among the countries who depend especially on high oil prices.
Video source: Bloomberg News