This year’s winter has been surprisingly mild so far. The effects of the surprisingly warm weather have a significant impact on the economy, one that is hard to oversee now.
The mild weather caused a dramatic decrease in the usage of oil used for heating as well as in the usage of natural gas. A plunge in the stock market oil prices has followed. The Wall Street Journal reported that oil prices reached a 19 month low yesterday, hitting around 54 $ for a barrel ( http://online.wsj.com/article/SB116844625784572707-search.htmlKEYWORDS=oil+prices&COLLECTION=wsjie/6month).
This seems to be good news for the whole U.S. economy, as well as for the U.S. consumers. The low oil prices mean lower transportation, logistics and production costs for many industries. It should also give a good mood to the millions of American car drivers, as gas prices might fall in the close future.
On the other hand, this phenomenon is causing problems for the energy sector companies in the USA, as well as for OPEC, as they see their profits plunging. There is a dual negative effect on American energy companies. First of all, it cuts down the sector's profits. Chevron already announced that the decline in crude oil prices will indeed hurt its upcoming quarter profits (http://online.wsj.com/article/SB116848607242073432-search.html?KEYWORDS=chevron&COLLECTION=wsjie/6month). Furthermore, the energy companies have a bad press, as people get worried that the unusually warm weather is an effect of the global warming, and yes, the energy sector is the first one to blame. This forced the industries giant Exxon to agree on talks about limits for the gas emissions which are supposed to be one of the causes of global warming (http://blogs.wsj.com/washwire/2007/01/11/exxon-warns-to-greenhouse-dialogue/).
OPEC will probably react with a decrease in oil production in the coming days to boost up the oil prices, but in the mean time, U.S. consumers may enjoy the effects of the decrease in oil prices.
The mild weather caused a dramatic decrease in the usage of oil used for heating as well as in the usage of natural gas. A plunge in the stock market oil prices has followed. The Wall Street Journal reported that oil prices reached a 19 month low yesterday, hitting around 54 $ for a barrel ( http://online.wsj.com/article/SB116844625784572707-search.htmlKEYWORDS=oil+prices&COLLECTION=wsjie/6month).
This seems to be good news for the whole U.S. economy, as well as for the U.S. consumers. The low oil prices mean lower transportation, logistics and production costs for many industries. It should also give a good mood to the millions of American car drivers, as gas prices might fall in the close future.
On the other hand, this phenomenon is causing problems for the energy sector companies in the USA, as well as for OPEC, as they see their profits plunging. There is a dual negative effect on American energy companies. First of all, it cuts down the sector's profits. Chevron already announced that the decline in crude oil prices will indeed hurt its upcoming quarter profits (http://online.wsj.com/article/SB116848607242073432-search.html?KEYWORDS=chevron&COLLECTION=wsjie/6month). Furthermore, the energy companies have a bad press, as people get worried that the unusually warm weather is an effect of the global warming, and yes, the energy sector is the first one to blame. This forced the industries giant Exxon to agree on talks about limits for the gas emissions which are supposed to be one of the causes of global warming (http://blogs.wsj.com/washwire/2007/01/11/exxon-warns-to-greenhouse-dialogue/).
OPEC will probably react with a decrease in oil production in the coming days to boost up the oil prices, but in the mean time, U.S. consumers may enjoy the effects of the decrease in oil prices.
