The data speaks to the many who remain skeptical of the upside to the cheap price of gas.
“The economic benefit to the U.S. as a result of low oil prices has been called into question due to the amount of economic activity that was generated as a result of the shale boom, itself,” Anthony Starkey, manager of energy analysis at Platts Bentek, an analytics and forecasting unit of Platts, an energy and commodities information provider. “The shale boom created high paying jobs and generated demand for investments in infrastructure to drill for, transport, and refine oil. All of this was funded with $100 oil and now that those prices have crashed, so too has the money it created in spurring that growth.”
Kilduff cited reports from the JPMorgan Chase Institute and Visa on the consumer spending boost in making his case, but there’s an interesting footnote — both reports were from the Spring 2015.
Diana Farrell, the CEO of the JPMorgan Chase Institute and lead author of the report, said the answer to the riddle is this: cheap gas did help the economy — past tense.
In the period that JPMorgan studied — April 2014 through January 2015 — there was a boost in consumer spending which the bank could track because it used debit and credit card transactions as the basis for its research. But in the update that JPMorgan plans to release this Spring using more current data, Farrell said the conclusion will be different: the boost from cheap gas already occurred and isn’t still happening, and likely won’t again.