If you work in manufacturing, the free fall of gasoline prices has, in many ways, been a blessing: Feedstock and transportation costs are down, and consumer confidence is swinging way up. But of course, not everyone has been rejoicing. For those whose business depends on demand for oil, the increased supply of crude oil — thanks to the impact of shale in the U.S. and the continued abundant production in countries such as Russia and Saudi Arabia — has taken a bite out of profits. Meanwhile, for those who work in infrastructure buildout linked to the shale boom,some reports estimate that the demand for shale in the U.S. and abroad as a LNG export will continue to reap rewards on the industry. Then again, others caution that if supply over-runs demand, lower profits will curb investments in shale-related business.
No matter where you fall in this mix of hope and dread, the big question is: How long will it last? Here, Dan Dicker, an OilPrice.com senior contributor, says that if production slows down it will take at least six months for the price of oil to rebound. That's a big "if" and dependent on some production easing up. According to Dicker, it has taken a "perfect storm" to bring oil prices down, including production abroad, a rising dollar, economic troubles in China and EU and increased shale production in the U.S. Will it take another perfect storm to bring them back up?
Video by Bloomberg Business.