The Untold Problems of Cheap Gasoline

When most people see cheap prices at the gas pump, they only think of how it benefits their wallet. Full Measure correspondent Scott Thuman notes gas prices are the lowest since 2009, but there’s a price to pay for saving at the pump.

“Gas prices in the U.S. are averaging $1.80 a gallon, more than a dollar less from the peak last year,” says Thuman. “In many American households, cheaper gas goes a long way toward balancing the family budget; but for hundreds of thousands of families tied to the industry, they’re paying a high price for low-cost oil.”

The gauges at the gas pump are spinning lower and lower. Current prices are under $2 a gallon in most states. The jaw-dropping cheap prices even became a major bragging point in President Obama’s recent state of the union address. “Gas under two bucks a gallon ain’t bad either,” the president quipped . . .

The current oil bust is rattling stock markets around the world. U.S. stocks produced their weakest start in January since 2009. Patron says cheap oil could also impact the banking sector; and that, too, is contributing to a jittery stock market.

“Particularly the independent companies that are active in the U.S shale,” said Patron, “that borrowed heavily to finance their production. Prices have dropped, revenue has dropped, and so they could default on these loans. If that happens, banks could be left with billions of dollars of bad loans. The bond holders could lose their investment; and this increases the risks associated with investing and markets at a time when there’s already heightened concern about China.” (Read more from “The Untold Problems of Cheap Gasoline” HERE)

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