“A Penny Not Spent on Gas . . is a Penny Earned,”
or, “Houston, We You Have a Problem”
“Oil’s Drop Spills Into Other Assets.”
—Headline, Wall Street Journal (12/12/2014)
You’d certainly think collapsing oil prices would qualify as a “white swan” event — an unforeseen, “three standard deviations” occurrence that most people would view as an unmitigated positive.
A black swan, of course, is the opposite.
But, judging from at least recent business headlines, cheap plentiful energy is apparently more of a “gray swan.”
The two chief negatives? (offset by many, many salutary effects):
One. Diminished asset values and falling stock prices — particularly in energy patch stocks (think, ExxonMobil, Chevron, and Conoco Phillips) in so many retirees’ (and institutional) portfolios; and
Two. Whacked capital spending and lost jobs affecting the same sector(s) (and local economies).
Pros & Cons; “What’s Bad for Houston . . .?”
But let me suggest to the nation’s 60 million(?) and growing retirees (at least the ones that are still driving): I’d rather save 
$200 bucks at the gas pump each month than have an extra $200 in my IRA or 401(k).
Two hundred cash is $200 cash; $200 in appreciated investments feels more speculative and somehow off-limits.*
And while I appreciate that Houston’s housing market may be a casualty of suddenly cheap gas — that may not be such a bad thing for . . . practically everywhere else.**
Once upon a time, General Motors’ CEO confidently exclaimed: “What’s good for GM is good for the country.”
Sorry, but today’s version is, “What’s bad for Houston is good for the country.”
National Schadenfreude?
In the wake of oil’s collapse, energy analysts are scrambling to make sense of things — and predict what’s going to happen next.
Just one hitch: at least to me, such experts now have a major credibility problem.
Put it this way: if you never saw the 2014 oil price collapse coming, what makes you qualified to predict what happens from here??
*$200 is also approximately the interest earned — in a year! — on $100k in savings at today’s microscopic interest rates.
**You might even call it a kind of national Schadenfreude (I always wanted to work that word into a post!), given how Texas’ economy seemed relatively immune from the ill economic winds affecting the rest of the country the last decade or so.
Due for its comeuppance next: Wall Street.
