Oil and natural gas prices have crashed in the last 18 months, wreaking havoc on the industry and leading to tens of thousands of job losses. But, as EnergyWire puts it in a new story, “we also know what economists tell us: Money doesn’t disappear; it just goes somewhere else.”
Where? Turns out, not the predictable places.
Trucking and rail might be expected to benefit from low gas prices, given the billions they spend each year on fuel. But 2015 also saw weak consumer demand and a shrinking energy sector, so transportation profits were equally weak.
Americans are driving more — according to the Department of Transportation, we drove a record 3.15 trillion miles in 2015, reports EnergyWire. But we aren’t buying more. Stanley Fischer, vice chairman of the Federal Reserve System, is one of many economists who believes cheap gas and cheap oil will eventually give a boost to consumer spending, but that it hasn’t happened yet.
“We haven’t seen the impact on GDP or spending to the extent that we expected to.”
So who is seeing a boost from low oil and gas prices? Three sectors: the auto industry, airlines, and gasoline refineries. Record profits for Ford and General Motors; operating profits for U.S. airlines in the first nine months of 2015 of $22 billion; some of the “strongest performances in years” for independent refineries in the U.S.
So now we know where all the money went.