How the current low price of oil can positively effect a family’s finances and savings?
With the price of oil so low, the major companies have cut back dramatically on drilling for new fields; there is quite sufficient oil from existing fields to more than cover demand. That has clearly impacted on rig workers who have historically earned good money without having any long term job security. Their families may find that there is less money to spend in the coming weeks. However the question is what impact the price has made on other areas, including general consumers. Businesses that can transport goods more cheaply than just a few months’ ago obviously benefit enormously but does it make any real difference to the ordinary person?
For those heating their homes with winter approaching it will be nice to actually see utility prices fall, albeit unlikely by the amount the major suppliers are saving. Oil has not been so cheap since 2009, both Brent Crude and US Crude standing at below $50 a barrel.
The cost of fuel at the pumps should fall but the retail cost of fuel is made up of the barrelage costs but some elements that are not affected; company overheads and of course government taxation. In reality any saving will not have much impact on a family’s finances as such but it is certainly better than seeing the cost of gas for the automobile rise and more expensive heating bills.
No Sign of a Rise
Goldmann Sachs recently predicted that the price of oil may not rise in any meaningful way until at least 2030. There are several factors changing all the time with Iran’s oil likely to become more readily available and the US of course producing strongly. No one country looks to be able to dictate anymore.
The result should be stabilization of energy and fuel raw material costs which consumers are certain to welcome. However there are so many elements involved in pricing products of all kinds so it is not the end to inflation.
At least with the economy improving there is a chance that every family can work towards improving their financial situation. Those people in debt are likely to be able to get competitive personal loans to pay off any ‘expensive’ debt they have. The most obvious and the most common debt is credit card balances; at the end of every month a penal rate of interest is added to any balance. Personal loans from just right bad credit lenders are readily available for those in work that can demonstrate their income justifies approval. The whole process from making an online application to getting approval and the money in the bank can take less than a working day.
Interest rates are likely to remain low though Goldmann Sachs are not suggesting that they will remain the same until 2030. Certainly lending rates have come down even for those people with a poor credit score. The upshot is that personal loans can be used to pay off expensive debt as part of an exercise to improve your finances. What no one should do is to get such loans to buy luxuries that they can ill afford. The recession is a recent memory and logically no one should want to return to the time when they could not pay their bills.
Everyone should be happy that the oil price has come down. Businesses rarely see one of their major expenses actually falling and those running a significant number of vehicles will certainly benefit. Families see cheaper heating as a benefit so there is a saving under the expenses column. That column’s total can reduce further by getting rid of expensive debt such as the credit card illustration above.
There are still some obstacles ahead for most economies and certainly adults with children should be thinking seriously about the future; not just spending all their income each month. The future is their children’s education, building a fund in the event of an emergency and certainly saving in one form or another for retirement. A good start would be to put aside everything that is saved by cheaper prices, even the few dollars a month for gas, and the potentially larger saving on domestic heating now that oil prices are so low.