Oil Prices Tumble to $69/Barrel. Why?

Oil Prices Tumble to $69/Barrel. Why?
What does this mean for the economy, our personal wallet, our investments and the bigger picture?
 
On September 10, 2024, oil prices dropped as low as $65.59 per barrel (US WTI). Prices recovered somewhat to $66 by the end of the day. This is far below the $84 price on July 3, 2024, or the 5-year high of almost $121/barrel. (Prices clawed back to $69 on Thursday, Sept. 12, 2024.)

Below are the topics we’ll cover in this blog. Email [email protected] if you would like an updated Oil Stock Report Card.
 
Why Did Oil Prices Tumble to $66/Barrel?
How Will Lower Oil and Gasoline Prices Affect the U.S. and Global Economy?
What Do Lower Oil and Gasoline Prices Mean for Our Personal Budgets?  
Should We Worry About (and Protect) Our Investments?
What About the Bigger Picture (Clean Air, Water, Oceans, Animals and Humanity)?
Sept. 22, 2024, is Global Car-Free Day
 
And here is more information on each point.
 
Why Did Oil Prices Tumble to $67/Barrel?
On September 10, 2024, OPEC revised their 2024 demand growth forecast down to about 2 million barrels per day. Next year, oil demand is expected to grow by 1.7 million barrels per day. This is still well above the historical average before the pandemic. However, lower than expected demand was the driving force causing prices to drop so precipitously yesterday after the announcement.
 
Some of the reasons why the demand has softened slightly include China’s aggressive move into electric vehicles and slow global GDP growth. According to the International Energy Agency, China had 8.1 million new electric car registrations in 2023, which is 30% higher than 2022. Over one million EVs were sold in August in China (source: Rho Motion). The move to electric vehicles over the internal combustion engine (ICE) means less gasoline than forecasted will be sold in China.

The Tesla Model Y was the bestselling vehicle in the world in 2023, with over 1.2 million deliveries.

How Will Lower Oil and Gasoline Prices Affect the U.S. and Global Economy?
High oil prices are highly correlated with recessions. In the chart above, the grey lines are recessions, and they match up with the high oil prices. When consumers have to spend more on their commute, they have less that they can spend on other bills, and certainly on discretionary items. Since the US economy is driven by the consumer, with 68% of GDP made up of consumer spending, lower oil prices can be positive for the U.S. economy, if the industry weakness isn’t too severe.
 
The United States produces more crude oil than any other country. However, US consumers also use more gasoline (and other types of energy) than any other country. When the U.S. economy is strong, that’s positive for the global economy because the U.S. imports a lot of goods from other nations. Conversely, when the US sneezes, the world catches a cold. So far, so good.
  
What Do Lower Oil and Gasoline Prices Mean for Our Personal Budgets?  
Thankfully, retail gasoline prices dropped to $3.24 a gallon. That is down from about $5/gallon in June 2022. 

However, most of us are still struggling with unaffordable housing and unsustainable debt. Government leaders and central banks still have a lot of work to do to fix the imbalances. However, waiting for politicians to fix things can be very frustrating.
 
There are ways that we can save thousands of dollars annually in our budget with smarter big-ticket choices. Email [email protected] and we will send you a few options on how you can learn budget-saving, life-transformational strategies. You can read about them in the 6th edition of The ABCs of Money. You can learn and implement them at our Financial Freedom Retreats.
 

​Should We Worry About (and Protect) Our Investments?
If oil prices remain under $70 a barrel, the next quarterly earnings reports for these oil companies will likely miss their guidance. They could also show a net loss on the quarter. Many of the oil companies are trading at or near their 52-week lows (with the weaker demand). However, prices are still relatively high on the five-year continuum, and could drop further when 3rd quarter 2024 earnings are released in October of this year.
 
Supply and demand are key for oil company profitability and shareholder returns. Right now, both demand and production capacity are high. OPEC countries have recently reduced production in an attempt to keep prices at $80/barrel or higher. However, there are crises that can drastically change the formula. The all-time high oil prices were during the wars in Afghanistan and Iraq. (The wars in the Middle East and Russia/Ukraine can push prices higher, particularly if they expand beyond these regions.) While this might be positive for the oil industry, it can also be harmful by pushing the world economy into a deep recession. And, even when one industry is strong, the macro economy can change the trajectory on a dime. For instance, when the pandemic hit and the world shut down, oil prices plunged to negative territory, and the oil companies lost 60% or more of their share price in less than a month.
 
As Andrew Lo, an MIT Professor, is fond of saying, “Physics has three laws that explain 99% of the phenomena, and economics has 99 laws that explain 3% of the phenomena.” Almost daily, we see stocks soar or plunge. The general trend since the Great Recession has been up. So, it’s easy to think that if we just “buy and hold,” everything will come up roses.
 
However, 21st Century recessions dive far and fast, and then take years to recover. Many of us have oil or petroleum-based chemical companies in our portfolios, particularly if we have an insurance product, value fund or Dow Jones Industrial Average index fund. So now, with stocks trading at all-time highs, it’s a great idea to rebalance and protect our wealth. It’s not a matter of jumping all in or all out of the markets or oil stocks (unless you want to green your portfolio). It’s a matter of having an age-appropriate plan that is diversified, while earning 5% yield on the safe side (without paper losses).
 
Join us at our Financial Freedom Retreat October 18-20, 2024, to learn time-proven, 21st Century strategies that earned gains in the Dot Com and the Great Recession, and outperformed the bull markets in between.
 
What About the Bigger Picture (Clean Air, Water, Oceans, Animals and Humanity)?
People living in the Middle East, Canadians, Americans, Australians, and Russians have the highest CO2 footprint per capita. Italy, Greece, Spain, and the U.K. have CO2 footprints that are about a third of those countries or less. Developing countries tend to have much smaller CO2 footprints, with Africa, having a rounding error of the rest of the world. A lot of that has to do with our commutes and our residential and building energy usage.
 
There are many ways that we can lower our CO2 footprint, while still living a purposeful and rich life. Smarter choices can save us thousands in our budget, with only small fixes and changes in lifestyle. For instance, we can fix the leaks at home and make sure that we are not heating and cooling the outside air (even if we are renters). A simple timer on our water heater, or drying clothes on a line can result in a dramatic reduction on our MW usage (and utility bill). Read The Power of 8 Billion: It’s Up to Us for tips and information.

Sept. 22, 2024, is the Global Car-Free Day
Driving everywhere in a single occupancy vehicle is an expensive, CO2-intensive endeavor. Switching to a more sustainable commute could save us $8000 or more annually each year. Why not try at least one day of using a different type of transportation on Sunday, September 22, 2024, which is the Global Car-Free Day. If you post any pictures or video online, be sure to use #EarthGratitude so that we can easily find and like it.

Bottom Line
Lower prices are good for consumers. However, oil companies want to keep prices above $80/barrel for their own profitability. So, I wouldn’t count on oil and gasoline prices remaining where they are for very long. Rebalancing our investments and protecting our wealth means that we don’t have to worry about the all-to-common wild peaks and valleys in equity and oil prices. Fixing our commute to be less reliant on expensive fuel like gasoline could help us balance our personal budgets and have more money for things we like a lot more than oil rigs – like bucket list vacations or saving up to buy a house.

Join us at our online Oct. 18-20, 2024 Financial Freedom Retreat and our Bond/What's Safe Master Class Oct. 26, 2024. Learn how to:

* Invest in hot industries, such as Nvidia and artificial intelligence,
* Hedge against a weaker dollar,
* Invest and compound your gains,
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* Easy and efficacious nest egg strategies,
* Get hot and diversified (including in artificial intelligence and EVs),
* Evaluate stocks,
* Keep an age-appropriate amount safe, and,
* Know what's safe in a Debt World.

You'll even discover how to save thousands annually with smarter big-ticket choices. Yes, it's a complete money makeover. 
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Email [email protected] to register. Learn the 15+ things you'll master and read testimonials in the flyer on the home page at NataliePace.com. Register with friends and family to receive the best price. ​

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If you’d like an unbiased 2nd opinion on your current wealth plan, email [email protected] for pricing and information.
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Join us for our Online Oct. 18-20, 2024 Financial Freedom Retreat. Email [email protected] or call 310-430-2397 to learn more. Register with friends and family to receive the best price. Click for testimonials, pricing, hours & details.

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Natalie Wynne Pace is an Advocate for Sustainability, Financial Literacy & Women's Empowerment. Natalie is the bestselling author of The Power of 8 Billion: It's Up to Us and is the co-creator of the Earth Gratitude Project. She has been ranked as a No. 1 stock picker, above over 835 A-list pundits, by an independent tracking agency (TipsTraders). Her book The ABCs of Money remained at or near the #1 Investing Basics e-book on Amazon for over 3 years (in its vertical), with over 120,000 downloads and a mean 5-star ranking. The 6th edition of The ABCs of Money and the 2nd edition of Put Your Money Where Your Heart Is are the most recent releases of these books. Follow her on Instagram. 
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Natalie Pace's easy as a pie chart nest egg strategies earned gains in the last two recessions and have outperformed the bull markets in between. That is why her Investor Educational Retreats, books and private coaching are enthusiastically recommended by Nobel Prize winning economist Gary S. Becker, TD AMERITRADE chairman Joe Moglia, Kay Koplovitz and many Main Street investors who have transformed their lives using her Thrive Budget and investing strategies. Click to view a video testimonial from Nilo Bolden.​

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Important Disclaimers
Please note: Natalie Pace does not act or operate like a broker. She reports on financial news, and is one of the most trusted sources of financial literacy, education and forensic analysis in the world. Natalie Pace educates and informs individual investors to give investors a competitive edge in their personal decision-making. Any publicly traded companies or funds mentioned by Natalie Pace are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies. Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a diversified strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable. However, NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.