The recent plunge in oil prices should be — mostly — good for the U.S. economy.
Cheaper fuel brings big savings for consumers and businesses — several hundred billion dollars since prices crashed from more than $100 a barrel to less than $30. Gasoline, diesel and heating oil make up about two-thirds of the roughly 20 million barrels of oil consumed in the U.S. every day.
Lower oil prices are also helping cut the U.S. trade deficit by slashing the cost of imported oil. And they’ve brought lower operating costs for shippers and other transportation companies, which helps boost profits and hold the line on the cost of travel and moving goods.
All in, the sustained drop in crude prices should add roughly half a percent to U.S. GDP, according to the Dallas Fed.
And the overall role of the energy sector on U.S. employment is relatively small, according to Dallas Fed economists. Oil and gas industry jobs as a share of total employment peaked in the early 1980s at less than 0.8 percent, and currently stand at about 0.5 percent.
Lower prices are expected to boost job growth in states outside the oil patch, according to analysts at the Council on Foreign Relations.
But those are national averages. Oil and gas producing companies and states are already feeling the pain, as new production plans are shelved, workers laid off and capital spending cut back.
Hardest hit are states that have seen the biggest job gains from the boom, and are most heavily reliant on employment in the energy sector, including North Dakota, Oklahoma and Wyoming. Other big producers like Texas, Louisiana and Alaska are feeling the headwind of lower oil prices.