However, the slide in oil prices may stimulate the economy. In a separate Reuters interview, I was asked whether we might see gas below $2 since that may help stimulate the economy driven by the retail consumer. We would probably need to see oil slide another 50% in order for this to happen, given the last time gas prices were that low was in 2009, post the financial crisis. (See in the chart below). That could happen if Saudi really wants to destroy other oil producers in spite of itself, just like it cut prices by more than half in the 80’s.
This article was written by Jodie Gunzberg, global head of commodities, S&P Down Jones Indices.
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