What happens when the energy sector and energy commodities goes down for 2 years, but, everything else goes up?
With only 5 to 10 percent of U.S Companies being in the Mining, Oil and Gas Industries and most of that being medium to large corporations, the recent fall in crude oil, gasoline and diesel fuel prices has not hurt the profits of small business, most small business consume these products, so when they are lower, small business have less monthly fuel cost.
At the same time right now, the broader equity and financial markets are near all time highs providing 'wealth effect' to the millions of consumers that own these assets.
What that means is people with stocks, IRAs, 401ks, and things like that, are enjoying lofty account values and low cost of fuel at the same time, this is the so called 'goldilocks' economy, where inflation runs low as the economy continues to expand and create jobs at a steady rate.
Here at Vilnius Industries we would argue that small business are the beneficiaries of this divergence, low crude oil price and recent highs in the broader equity indexes such as the S&P 500 and tech heavy NASDAQ. Because the customers of small businesses feel good about their retirement accounts value, that makes them more likely to spend money on goods and services now in the present, instead of delaying.
This divergence is what we are talking about, the broader economy expanding, creating jobs with innovation like tech leading the way. At The Same Time…. Energy, Oil and Commodities stay low and steady.
This is the best time to have a product, write a business plan, do some networking and put that great idea into action.
Vilnius Industries is a small business, author, writer and investor. Vilnius produces proprietary content and material under the label of T.E.P.S which is a registered copyright. More of our content can be viewed at LinkedIn, Facebook and Bank of America Small Business Community.
I agree, everyone I talk with likes this low fuel costs, gas stations just pass the fuel along, they make the same money at $2 per gallon or $4 per gallon. The oil explores and mining companies are the ones hurt by the low prices, everyone else is just the conduit to get those products to the market price. All those small and medium sized downstream companies are fine with low crude oil / energy prices.
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