The cost of oil is still dropping but halted at just under $49 a barrel by the week's end. Friday's plateau finally caused the stock market to pick up again after four straight days of losses.
This unforeseen oil drop has confounded market analysts and spurred a wide range of reactionary effects: saving the average consumer money, yes, but also spelling job cuts within the industry.
The most obvious effect of the lower cost of gas is extra savings in transportation costs, as well as energy savings for gas-heated homes and businesses. Definitely a win for the average citizen.
On the other side of the coin are the inevitable layoffs for companies dependent on oil production. With lower demand and profits, plenty of jobs will disappear, including 9,000 this week at international oil company Schlumberger.
Looking at the bigger picture, markets are spooked by the drastic dropoff. Just seven months ago, the cost of an oil barrel was more than double today's price at $115 per barrel. The dropoff in gas prices represent part of December's 0.4 percent overall consumer price slide.
This deflationary trend is the exact opposite of what the Federal Reserve is looking for before it will start to raise interest rates again. Slow, modest inflation rates are generally associated with strengthening economic trends. Current conditions are leading to more investment in gold and bonds rather than stocks - a good sign for interest rates remaining low.
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