While it’s pretty clear that lower oil prices are
great for the average US consumer, many are worried about what will happen to the massive US energy sector.
Since the advent of modern hydraulic fracturing, the energy production industry has been a robust source of new, well-paying jobs.
But while the drop in oil prices is certainly bruising energy business, Goldman Sachs’ Kris Dawsey believes the net effect will be positive for US employment.
Although jobs in energy sectors have grown quickly over the past few years, they still make up a small share of the overall US employment. In other words, even if there are job cuts within the energy sector, they will not largely affect the US job market as a whole.
Additionally, “stronger growth and the consequent boost to real incomes” from lower oil prices “should result in a positive effect on overall employment,” Dawsey says.
The only places that could really be hurt by the drop in prices are local economies “particularly reliant on energy production,” Dawsey adds.
And “riskier players may be forced out of the market as shale profits in the southern plains and gulf region appear at risk,” according BTIG’s Dan Greenhaus.
Ultimately, it will all become clearer in once in hindsight.
“Barring a sharp reversal to the upside in oil prices, this debate is not likely to end anytime soon, and it raises even more uncertainty regarding 2015,” Greenhaus said. “It seems to us too easy to simply say [the dropping oil prices] are all amazingly wonderful for the US economy.”
Nevertheless, he concedes, that lower oil prices are a far better fate than higher oil prices.