Oil Falling, But Companies Not Passing Savings Through To You

Now that oil is about $40 off its record high levels in July and its treading back toward $100 (and possibly below if OPEC doesn’t intervene), consumers are looking for some cost relief. But they’re not always finding it.

Gas prices have certainly come down. But when oil is a significant input into your business, not the actual product, prices are much stickier (NYT):

P.& G., Dow Chemical, Goodyear Tire and Rubber Company, as well as other big users of oil-based raw materials, are waiting to see if oil prices will stay down or continue to fall before they commit to price cuts.

“Everybody still feels there is too much uncertainty to be clear about what action they should take,” said Ali Dibadj, an analyst at Sanford C. Bernstein, who specialises in companies that use oil-based raw materials in making a variety of consumer products. “They won’t immediately drop their prices.”

This is how inflation works its way through the economy. And it’s yet another reason not to get too excited about a drop to $100 oil.

See Also:
Credit Suisse: OPEC Won’t Let Oil Fall Below $100

How To Solve Energy Crisis: Blast From Past When Politicians Had Balls

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.