What does cheap oil mean for the economy?

Published at: 2015-01-01 12:00 | Author: Dinu Boboc

Oil is essential for the world economy, making the price at which it is sold is a crucial indicator in every sector of the economy.

Lower prices means lower costs for manufacturers and carriers, and thus reduced product prices and increased sales and profits. When such conditions emerge, businesses begin thinking seriously about investment and jobs creation. By contrast, higher oil prices raise costs and boost inflation. If prices on goods rise too much, the amount consumers can afford to buy on a given budget will fall. As sales fall in an overheated economy, investments stall.

Since August, the price of a barrel of oil...