low oil and natural gas prices – so low that drillers are burning off the natural gas they can’t sell. Broughton displayed nighttime photographs from outer space showing natural gas flares from North Dakota’s oilfields that were as visible as the lights from American cities. Because prices are low, the rig count is drop- ping, and fracking will not grow in the United States during the short- or inter- mediate term, he said. Broughton predicted that diesel
prices, which are lower than they were previously but have not fallen as far as gasoline, will drop. He displayed a his- torical chart showing that diesel, West Texas Intermediate oil and Brent oil prices traditionally have mirrored each other, but diesel prices remain higher than the other two. “If the price of oil stays relatively
consistent with where it is now, we should see the price of diesel continue to fall over the next several months,” he said. “And that really, if they were as tightly correlated as they have been in the past, we ought to see diesel get down certainly under $2.50. We could even see $2.20-$2.25 a gallon.” Energy prices will remain low for
many years “unless somebody does something crazy,” he predicted, such as a country like North Korea doing something completely unexpected. The Saudis, the low-cost producer, will continue to drill enough to remain a primary U.S. oil exporter because that ensures continued protection by the U.S. military.
CONSUMER ECONOMY Low energy prices are helping fuel
the consumer economy. Consumers have more money because they are spending less on fuel and other energy costs, while the price of everything else is dropping because of the reduced costs of energy inputs. Margins will improve and/or prices will fall, so even if income stays constant, prosperity will increase. The improving U.S. economy is benefit- ing Europe’s, which can export more to the United States because the strong
ARKANSAS TRUCKING REPORT | Issue 3 2015
dollar has lowered the price Americans pay for those goods. That will be good for American consumers, who will have more purchasing power, but bad for manufacturing. “Your BMW, your Mercedes, your
Toyota, your GM, your Ford, you can source the alternator in Munich, or you can source it in Cleveland,” he said. “And the value of the dollar increases and the value of the euro decreases, and guess what? You’re buying a lot of
alternators from Munich instead of Cleveland. It’s just that simple.” Also helping the global economy is
the increasing size of the global middle class. “In the last 15 years, over two billion-plus people have gone from not having a phone because they were either too poor or too remote to string cop- per to them, to finally having a phone and then to having a smart phone,” Broughton said.
for a Checkup. It’s Time
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From departmental organization to hiring to workplace investigations and employee discipline – and everything in between – you can’t afford noncompliance.
CGWG’s HR Checkup provides a basic review of your company’s health. For $500, set up a one-on-one meeting with CGWG attorneys who will help you identify employment law compliance issues and establish a path to best practices.
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Contact us today to schedule your HR Checkup. Little Rock | 501-371-9999
Northwest Arkansas | 479-725-3825
CGWG.COM
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