Business Analasis

This article wrote by Mr. Mike King, who works for Motley Fool as a investment analyst, mainly indicated the reason that falling oil price lead to the booming of economy, especially in Australia markets. I would like to summarize it from three aspects such as Victim; Gainers; My opinion.

Victim

It's been a bad news for all oil and gas companies such as Shell, BP, Mobil, etc. Since the cost of producing are getting higher and higher, the downing price is a dramatically disaster for all the oil & gas companies. Furthermore, the shareholders of the companies are experiencing very tough time as the value of their stocks shrink a lot.

Meanwhile, the falling price of oil and gas also results in unemployment rate went up in oil industry and also some relating field such as mining and energy service have been affected severely.

Gainers

The most beneficiary party due to the fallen price of oil and gas is definitely the airline companies. Since the major expense in operation was the fuel bill, they did not only make some profit directly from the lower ongoing cost but also they sell tickets cheaper which allowed more customer to travel by the air.

On the other hand, all the car owners in Australia shows a happy smile while they pump at oil station. Because the rising money in the pockets will allow more disposable income translated into a pickup in spending.

My opinion

It seems like that Mr. King didn't go with what economics' idear about reaching an equilibrium level. From my point of view, I agreed with Mr. King about the lower price of oil and gas the better stimulating to consume economy. It's really too ideal to achieve the balance of supply and demand, especially when the economy trend went down. The government would prefer to see people holding some money on their hand rather than complaining in front of an oil pump.