Tuesday, August 14, 2007

Lower Gas Prices' Positive Effect on Industry

Does it seem that the media loves to report on gloom and doom, but seldom presents the positive side of things? This is especially true when referencing gas prices and the oil and gas industry in general. This short piece from one of our favorite sources, the Business and Media Institute, looks at the media’s dire predictions about gas prices, where they really are today and how the lower prices do actually benefit the industry, not just the consumer.

Forbes.com reported on August 7 oil prices are declining and gas prices are reciprocating.

“With gasoline prices peaking in May and subsiding a bit since then, it was only a matter of time before oil followed suit,” wrote Ruthie Ackerman, a reporter at Forbes.com. “Since the summer driving season is also wrapping up, oil demand should naturally decrease, putting a downward pressure on price.”

Leading up to the summer driving season, some in the media warned of $4, $5 and $6 a gallon gasoline. They may have to wait even longer to see those predictions come true as prices fall.

Contrary to conventional wisdom from those in the media, lower oil prices do have a positive effect on the oil and gas industry, as Ackerman pointed out.

“Lower oil prices are not only good for the consumer, but also boost investor confidence. ExxonMobil (NYSE:XOM) shares jumped 1.7%, or $1.42, to $83.50 at the close of the day Monday, while Chevron (NYSE:CVX) shares shot up 1.2%, to $1.00, to $82.02. BP (NYSE:BP) shares were boosted 1.6%, or $1.04, to $67.54 and Sunoco (NYSE:SUN) increased 1.0%, or 61 cents, to $63.48.

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