The Real Economic Impact of Plummeting Oil Prices

derrick Dropping oil prices are great for keeping prices down at the pump. This is always a bolster to consumer confidence, freeing up consumer spending cash. But remember for every action, there is a reaction. Or in this case, for every reaction there is an action.

At the source, the oil fields across the country- primarily concentrated in the Midwest- are experiencing very negative impacts from the oil prices dropping. This is because oil is a commodity, and as the demand for it begins to drop and projections gloom, drillers cut their workforce. The change in oil prices is a direct reflection of a compromised market for oil and dim speculation. This is where the drillers and the working man lose their livelihood.

This obviously directly correlates with a compromised employment rate, obviously. And a poor unemployment shakes investor confidence and drives down the stock market. In turn this undermines consumer confidence. This is because consumer confidence is shaken because of fallen stock prices and eventually loses ground.


Much more immediate and present in these once sleepy towns is the construction boom grinding to a halt. From North Dakota to Texas tiny little places swelled with petroleum workers over the past decade, since hydro-fracking took hold to tap oil reserves once impossible to access. Well with this influx came the need for housing, sparking a construction boom.



But with the demand for housing having dwindled to a trickle, developers put an end to new construction. And this isn’t even the most directly impacted facet; construction companies also put the brakes on commercial development as well. Namely, revenue disappears on oil well and derrick building.

So next time you take lower oil prices at the pump for face value, consider all the implications. You shouldn’t feel a twinge of guilt, rather, a hint of dread. Remember we’re all in this economy together and what’s bad for a large segment of the population is sure to have an impact across the big picture.

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