Tag Archive for 'Oil'

RESULTS: How will low fuel prices impact your sales and profits?

The Question:

Lower crude oil prices are expected to keep fuel prices low all year. How much will this impact your sales and profits?

19% - It will help to both increase sales and lower expenses.
38% - It won’t impact our sales much, but a reduced fuel budget will improve profits.
11% - We should see improved sales but don’t use a lot of fuel.
32% - It’s unlikely we’ll benefit from lower fuel prices in any way.
Jim’s Comments:
Now that crude oil has escaped the clutches of speculators and dropped well below $100 per barrel, a number of interesting things are happening.  Working-class folks have gotten what is essentially a huge tax cut, and global economies should benefit. But it is also creating interesting dynamics regarding currency exchanges and geopolitics.

We wanted to know what this drop in such a widely used commodity would mean out here on Main Street, so last week we asked our small business audience about it. I was surprised to see less than one-fifth allowed that the lower prices would benefit them in both sales and expenses. This response is likely a result of the new, more virtual economy, which I think was also why one-third said they wouldn’t be impacted at all by lower oil prices.

As you may have seen in my 2015 predictions, I believe you can count on oil prices averaging less than $70 per barrel for the rest of the year.

Drill, baby, drill?

For the second time in three years, American consumers and businesses have been subjected to crude oil prices at record or near-record levels and gasoline prices at over $4 per gallon. Since petroleum in general, and gasoline in particular, are both so connected to everyday American life, economists consider this kind of relatively sudden inflation in the price of a universally used commodity to be tantamount to the government imposing an abrupt and unbudgeted tax.

Since this price increase is indeed imposed on all of us, we wanted to know what you thought, so we asked this question in our recent poll on our website and Newsletter: Who is responsible for the near-record $4 a gallon price for gas? Here is what you told us.

The small respondent groups laid it off on OPEC and “C’est la vie.” Only 7% said, “OPEC - they’re gouging us,” but just 2% said, “No one is to blame - these things just happen.” Wall Street and Washington didn’t fare so well. “Greedy Wall Street speculators” were blamed for high gas prices by almost one-third of our sample, while almost six-of-ten pointed the finger at, “The Federal government - we should be drilling for more of our own oil.”

Two points in support of the 60% majority in our poll: 1) There is plenty of expert evidence that America has plenty of petroleum resources that could be tapped if allowed to do so by the federal government; 2) The last time oil - and gas - went this high, the one thing that brought the price down was the Administration (Bush) merely announcing that it planned to expand new oil exploration. Within a few months, crude oil was down by more than 50% and gasoline was in the $2.50 range.

America can control neither OPEC nor the commodities market. But it can influence the harvesting of our own natural resources. I’m with the majority on this one. What about you?

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