Goldman Sachs sez: Economy needs higher oil prices

[n2doc]

OPEC is closing in on a deal to cut production, which will surely cause oil prices to rise. Oil is already almost back to $50 per barrel, so cuts of nearly 1 million barrels per day could boost prices well into the mid-$50s, even up towards $60 per barrel. That will provide a windfall to oil producers around the world and the sacrifice for OPEC members will be more than paid for by higher revenues. For example, Iraqi officials say that for every $1 increase in the price of a barrel of oil, their revenues jump by $1 billion per year.

As a result, the odds of rising crude oil prices are high. But while that could be welcomed by the industry, consumers might not be as excited to see cheap gasoline disappear. After all, U.S. motorists have enjoyed two years of incredibly cheap fuel. Will rising oil prices put a dent in already tepid U.S and global economic growth?

Perhaps not. As Bloomberg reported, Goldman Sachs wrote in a Nov. 22 research note that the global economy could benefit from higher oil prices. That conclusion may not be obvious, but here is the logic the investment bank lays out: Higher oil prices lead to a wave of capital that flows into major oil producing countries such as Saudi Arabia. Unable to use all the capital, Saudi Arabia sends the excess savings back into the global financial system. Banks then use that capital to lend. Interest rates also fall as the financial markets are more liquid. The end result is lower interest rates, more financial liquidity, higher asset values and ultimately greater consumer confidence. In short, higher oil prices could boost economic growth.

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http://www.usatoday.com/story/money/business/2016/11/26/economy-oil-prices-goldman-sachs/94431546/

[HassleCat]

1. Depends on how we define economic growth

Injecting more capital into the financial markets will stimulate the system and inflate the bubble. We know what happens then.

[CentralMass]

2. What a bunch of blood sucking bsstards

[Cosmocat]

3. Just absolute and complete bullshit

The higher cost of oil the higher the cost of EVERYTHING because it effects all aspects of manufacturing and shipping relative to costs, and so many petroleum based products. The more consumers have to pour into gas for travel and heating, the less disposable income they have to put into the economy in other ways, etc.

[CentralMass]

4. Add the increase to heating costs as well

[Wellstone ruled]

5. How Ironic.

Good old Goldman,we are on the verge of the largest wealth transfer since Reagan,and these Slugs want higher Oil prices,you just can not make this crap up. With the Tax Code changes coming,throw in higher Fuel prices,and that formula means Financial disaster for 60% of Americans.

Well,all those Trump Voters better figure out where their Local food Pantry is located,their going to need it.

Did anyone else notice a little thing that happened with those Union Auto Workers who voted for Trump? Trump bad mouthed Ford Motor,okay,this was to the tune of 4 bucks a share lose,and all those Ford workers who voted for Trump just took a major hit in their Pension Plan. Ford gave Stock in lieu of cash to stabilize the short fall with their Pension obligations. Talk about shooting yourself in the foot!

Here we go again,Obama will receive blame for the coming grief to their Pensions.

[hughee99]

6. Well, I see how this benefits Goldman, anyway.

Consumers pay more for gas and oil and that money eventually ends up in wall streets hands.

The end result is lower interest rates? Is the problem right now that rates are too high?

[DonCoquixote]

7. hey, all the people that pilloried Hillary for her GS ties

looks like Trump will give them what they wanted.