Oil prices going down… hooray?

In less than three weeks, oil prices have declined by $12 (See: Oil prices’ swift descent into summer).  Great news right?  Well yes and no.  The decline has been propelled in large part by continuing economic problems around the globe.  Less demand equals lower prices.  Along with that, the economic and political turmoil in the European Union has helped strengthen the US dollar which has further depressed oil prices.  As investors flee the euro in fear of a victory by Greek leftists, this trend looks set to continue, at least for a while (See: Greek Syriza leader Tsipras attacks EU and Merkel).

Thus the fall of fuel prices is not entirely good news.  The US economy will continue to sputter and grow slowly until our markets in Europe begin to recover.  Therefore even with cheaper fuel, the US economy might not pick up its pace.  Therefore we’re left in the strange situation of cheering falling fuel prices, a phenomenon which benefits us in the short term, all the while knowing that the reason for this windfall is that our long-term economic problems look no nearer to being resolved.

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