Cheap oil buoys consumers, shakes up global governments

Associated Press

Cheap oil will be sticking around for a while.

That reality is wreaking havoc and causing uncertainty for some governments and businesses, while creating financial windfalls for others. Less-expensive crude is delighting consumers in some regions, while leading to widespread job losses elsewhere.

Oil has fallen from $107 to around $30 in the past 19 months. Furious production by the U.S. and OPEC led to an oversupply. Recently, a sluggish global economy has spurred concerns about demand.

A recovery in oil prices depends on when supply and demand can get close to equilibrium. It could be a rocky ride. In a recent research note, Goldman Sachs predicted "the path to a rebalanced market will be protracted and arduous."

The U.S. government forecasts Brent crude, the international benchmark, will average $40 a barrel this year. Bank of America Merrill Lynch is a bit higher, at $46.

U.S. households have saved hundreds of dollars on gasoline and heating oil. That's money they can spend in other areas of the economy. Businesses such as airlines that burn large amounts of fuel have reaped savings in the billions. But energy company profits have plunged, as have their stocks.