Oil industry cutbacks are a drag on U.S. economy

Annie Baxter Jul 16, 2015
HTML EMBED:
COPY

Oil industry cutbacks are a drag on U.S. economy

Annie Baxter Jul 16, 2015
HTML EMBED:
COPY

The oil industry’s retrenchment in the face of lower oil prices has had a palpable effect on the economy, according to a Goldman Sachs report.

The firm says low oil prices have caused energy and oilfield services companies to spend a lot less on drilling new wells and buying new equipment, costing gross domestic product as much as half a percentage point in the first six months of the year. 

Meanwhile, cheap oil hasn’t boosted consumer spending. Economists say Americans have pocketed their savings at the gas pump instead of spending the windfall elsewhere.

“I think it’s possible that in the short-term, the costs have outweighed the benefits,” said Steven Kopits, managing director at Princeton Energy Advisors.

Click the media player above to hear more.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.