Cheap Oil Doomsayers Lack a Little Credibility

Four years ago, news stories were about the evils of high oil prices. Now we are threatened by ... cheap oil?

Mon February 23, 2015 - National Edition
Giles Lambertson

Media love crises in the same way that plywood manufacturers love hurricanes. It isn’t because they are perverse industries: Someone has to report bad news, or sell the windows-protecting plywood. Still, it is pretty nervy to sell cheap oil as bad news for builders.

Here’s the thinking: Oil-rich states like Texas and North Dakota will suffer from oil being less than $50 a barrel because drilling units will be stilled, and oil field people laid off. Temporarily unemployed, the workers won’t be able to pay for the houses they had planned to have built in 2015. Poof! There goes the oil-country residential market.

Outside of oil states, of course, the cheaper oil and gas will spur consumer spending. With more jingly in pockets, a new house feels within reach. Yet some economists reportedly fear that the Texas housing market is so large that it will nevertheless force national home-building corporations to cut back. Cheap oil…woe is us!

But wait: Four years ago, news stories were about the evils of high oil prices. With a barrel of oil topping $100, gasoline prices zoomed, production costs of consumer goods rose, and homebuilders watched helplessly as potential buyers stayed renters. Woe is us… expensive oil!

Let me say that newspeople by and large are a virtuous fraternity of professionals. They just don’t act like it sometimes in pitching a story. They like to have it both ways: $100 a barrel threatens construction and $50 a barrel threatens construction. Is $75 a barrel just right?

The fact is, falling oil prices are good for consumers—that’s you and me, whether we are planning to buy a house or not, or live in Texas or not—or are even a Texas homebuilder! Our money goes further in fueling our car or our excavator. If we are smart, we will make sure to put a little extra money in savings—for when the price of oil goes up again!

When it comes to the price of oil, I’ve seen up and I’ve seen down, but when someone writes that cheap oil is bad, I’ve seen everything.