If you haven’t already heard: the price of gas is rapidly dropping. With a surplus of supply in the oil markets, Americans now are able to pay cheaper prices at the pump. This puts more money in the pockets of consumers, allowing them to spend somewhere else.
It has been projected that the cost of oil will drop to around $20/barrel. This will drop a gallon of gas to around $1.20/gallon. Yes folks, that is less than your typical gallon of water. How is this possible?
There has been a surplus of oil over the last year without much change in demand. The markets have been flooded, yet countries who export aren’t slowing down at all with their distribution. It will take some time to adjust, but we should see an adjustment in the supply over 2016.
In the mean time, the low price of oil has had a negative effect on the NYSE. Some industries are able to reap benefits from this, but others struggle. As the year plays out, we should see the stock market rebound as consumers begin spending their savings in other places.