It's good to pay only $35 when filling up my car with gas, rather than the $50 I've been paying for the past several months. While the fall in oil prices has lowered some of my daily costs, Wall Street on Parade doesn't think the oil price drop is a good thing for the economy.
Their reasoning is based on the fact that oil-related companies in the U.S. now account for between 35 to 40 percent of all capital spending. And these companies are cutting back capital spending, which translates into lost jobs. For example, Schlumberger is cutting 9,000 jobs; Baker Hughes, the oilfield services company, is cutting 7,000; BHP Billiton will cut 40 percent of its U.S. shale operations.
Of course, if the oil-related companies cut back, then their suppliers will have to. One instance: less steel piping is needed. Ergo U.S. Steel will lay off approximately 750 workers at two of its pipe plants.
And, the Federal Reserve Bank of Kansas City released its “Fourth Quarter Energy Survey.” The survey found: “The future capital spending index fell sharply, from 40 to -59, as contacts expected oil prices to keep falling. Access to credit also weakened compared to the third quarter and a year ago."
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