Yesterday I was explaining to my oldest daughter a few economics principles. I had one of those moments where you consciously stop yourself and say, "Remember this point, and ensure to apply it!" Maybe it is just me that experiences these moments?
We were discussing how the lowering oil prices are great for the general consumer. Lowering prices means that we are able to save more money on our daily activities, leaving more funds available to be spent on things more important to us than fuel that we burn up. However, life and economics is a balancing act that is always moving, needing a constant eye on it and the response to various policies to keep the balance.
The problem with lowering oil prices is that companies that invest into that industry and sector are holding back their investments due to the lower returns based on the present oil price and perceived lower pricing for the near future, can't blame them on this. This has meant the laying off of hundreds of thousands of oil industry employees and contractors. As we personally benefit from the lower oil prices, impacting many parts of our lives with lower transportation costs, which impacts every industry, there are many peoples personal stories that have been far more adversely effected by the lower oil prices.
I am not advocating for $100/ barrel oil pricing just to keep people in jobs. I am advocating that for every action there is an opposite reaction. Every time you save money on an item you purchased at a store, you are in reality taking that money out of that persons or companies bottom line. Don't feel too guilty, they agreed to it and most likely they had overpriced the product, hence why no one had purchased the product until the new price.
I do though advocate for longer term views on investment and deployment of growth. I advocate that with the long term in mind, perhaps being low on cash flow initially but having a cash cow in the long term, businesses and investors should look further out than 6 months. Not all investments are sound and should have the business or investor walk away, however did they contemplate the longer term and bigger picture?
We were discussing how the lowering oil prices are great for the general consumer. Lowering prices means that we are able to save more money on our daily activities, leaving more funds available to be spent on things more important to us than fuel that we burn up. However, life and economics is a balancing act that is always moving, needing a constant eye on it and the response to various policies to keep the balance.
The problem with lowering oil prices is that companies that invest into that industry and sector are holding back their investments due to the lower returns based on the present oil price and perceived lower pricing for the near future, can't blame them on this. This has meant the laying off of hundreds of thousands of oil industry employees and contractors. As we personally benefit from the lower oil prices, impacting many parts of our lives with lower transportation costs, which impacts every industry, there are many peoples personal stories that have been far more adversely effected by the lower oil prices.
I am not advocating for $100/ barrel oil pricing just to keep people in jobs. I am advocating that for every action there is an opposite reaction. Every time you save money on an item you purchased at a store, you are in reality taking that money out of that persons or companies bottom line. Don't feel too guilty, they agreed to it and most likely they had overpriced the product, hence why no one had purchased the product until the new price.
I do though advocate for longer term views on investment and deployment of growth. I advocate that with the long term in mind, perhaps being low on cash flow initially but having a cash cow in the long term, businesses and investors should look further out than 6 months. Not all investments are sound and should have the business or investor walk away, however did they contemplate the longer term and bigger picture?
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