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Bill Freehling is a business writer for The Free Lance-Star and Fredericksburg.com. This blog is on Fredericksburg-area business. Send an e-mail to Bill Freehling.
Looking for good news? Check out oil prices
THE COVER OF last week’s Bar- ron’s magazine pictured a half-full/half-empty glass of water.
And the headline–"The Economy May Be Better Than You Think"–made clear that Barron’s sees a glass that is half-full.
"These are hardly the best of times for the U.S. economy," the article starts. "But they may not be as bad as you think."
The thrust of the article is that there are several important factors that are receiving scant attention but that should help prevent a deep recession.
The top factor, Barron’s argues, is oil prices. As the economy has slowed, demand for oil has dropped sharply. A rally in the dollar has also reduced crude prices.
In mid-July, a barrel of crude was priced at $147. This week prices dropped below $65, a more than 50 percent decline.
That’s had a huge effect on gas prices at a time when consumers are starved for some good news. The drops should also help keep heating bills in check this winter for some.
On Friday, the average for a gallon of gas in the Fredericksburg area was $2.68, according to AAA. That’s down $1 a gallon in the past month.
That means it costs about $40 to fill up a 15-gallon tank, or $15 less than a month ago. For a commuter town like Fredericksburg, that savings can pay real dividends that could lead to more retail spending.
While gas prices obviously differ throughout the country, savings like that are widespread.
If crude prices hold at $80, Barron’s notes, that would translate to about $170 billion in energy savings over six months in the U.S.
The magazine argues that should stabilize the economy until the benefits of the government’s massive capital injection start trickling down to the proverbial Main Street.
Will they be right? That remains to be seen. But there’s no doubt that drops in oil prices have provided many with a much-needed piece of good economic news.
Here’s an anecdote that shows to what extent the economy and stock market are on people’s minds these days.
In The Free Lance-Star newsroom, we keep the police scanner turned on so we’ll know about major incidents in the area. Every now and then we’ll hear some conversation on the scanner that’s unrelated to the speakers’ work.
That happened Wednesday afternoon. We listened as two men discussed their investment portfolios and how much they’ve dropped of late.
One made the comment that really they were just paper losses, and he just needed to ride out the storm rather than selling and turning them into real losses.
Pretty sound advice.