“To a producer in Wyoming, if Brent’s $70 then I’m at $50, then I have to start asking does it economically make sense to keep drilling,” John Auers, executive vice president at energy consulting firm Turner Mason & Co, said in the Bloomberg article. “They might start reallocating capital, you might see projects slowed or shut down.”
Nevertheless, cheap oil may still benefit other areas that the transportation ETFs track, including trucking and airliners. Cheap energy has helped cut down gasoline prices and costs, bolstering other transportation sub-sectors’ bottom line. IYT has a 23.2% weight toward delivery services, trucking 18.5% and airlines 15.0%. XTN includes trucking 37.1%, airlines 26.7% and air fright & logistics 20.0%. [Transportation ETFs are Loving Cheap Oil]
iShares Transportation Average ETF
For more information on the transportation sector, visit our transportation category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own shares of IYT.