Current Events Black Gold Friday the Economist

Current Events

Black gold Friday

The Economist magazine recently released a piece that outlined the recent fall in gas prices. The article compares the fall in the oil price to what a similar fall would be on the stock market.

"IF IT had happened in a stockmarket, we would be talking about a crash (the equivalent decline for the Dow would be more than . Oil's 6.7% fall yesterday was all the more remarkable in that the event that triggered it - Opec's decision not to cut production (Buttonwood, 2014)."

Explanations for the drop in price range but they include a weak demand and other alternative fuels that have been gaining in popularity. However, the fall in the price for oil was significant for the entire global economy and will have many implications for sales in general.

For many individuals when the price of oil falls it acts as something akin to a tax break. People are able to hold onto more of their money because they are spending less of it at the gas pump. Thus it is adding disposable income to people's budgets and in the holiday season when consumption levels are at their highest. Therefore it is likely that people will make more purchases throughout the holiday season. However, this may not be the case for all businesses. Black Friday shopping at brick-and-mortar stores in the United States was down about 7% from a year ago, according to ShopperTrak, but more purchases on Thanksgiving Day nearly made up the difference; meanwhile, online retailers recorded double-digit year-on-year increases in sales (Neuman, 2014). Thus it will be interesting to see if or how the decreased gas prices affect holiday shopping trends.