Falling oil prices are poison for the Australian economy.
That hasn’t stopped the perpetual optimists noting that at current levels, the oil price fall will translate to falling petrol prices and a saving of around $20 a month in the average household’s petrol spending. Happy days!
What they fail to mention is that the oil price fall coincides directly with collapsing prices for other energy – notably coal and gas. So while the average motorist will save $20 a month on their petrol purchases, their superannuation fund will have been smashed as the share price of stocks in this space react to the increasingly dismal profit outlook.
So save $20 a month on petrol – great. Drop in wealth, worse by a large margin.
Oh, there is also the point that weak commodity prices hurt Australian national income, economic growth and by definition employment. Hope those losing out as share prices fall and job prospects deteriorate rejoice when they save 15 to 20 cents a litre on their petrol purchase. It is a trade off where Australia loses out.