OIL – THE GOOD AND BAD NEWS – AT 9:59 A.M. ET:   Oil prices are dropping, and, with them, gasoline prices at the pump should drop even further.  From Reuters:

LONDON (Reuters) - U.S. oil prices headed for their eighth consecutive week of falls on Friday, the longest losing streak since 1986, after a sharp drop in Chinese manufacturing increased worries over the health of the world's biggest energy consumer.

Activity in China's factory sector shrank at its fastest pace in almost 6-1/2 years in August as domestic and export demand dwindled, adding to worries about lower consumption of crude in the second-biggest oil user.

Asian stocks followed Wall Street lower as fears took hold of a China-led slowdown in global growth.

U.S. crude for October delivery <CLc1> was 50 cents lower at $40.92 a barrel by 1230 GMT. On Thursday, the September U.S. crude contract <CLU5> saw its lowest intraday trade since March 2009 at $40.21 a barrel before it expired at the market close.

Brent oil <LCOc1> was on track for its seventh weekly decline in eight, down 60 cents at $46.02 a barrel, after settling 54 cents lower on Thursday.

Both global oil benchmarks are near 6-1/2-year lows, with U.S. crude heading for its longest weekly losing streak in 29 years.

"The market is stuck in a relentless downtrend," said Robin Bieber, a director at London brokerage PVM Oil Associates.

"The trend is down - stick with it."

COMMENT:  It's good news for the consumer, but there has to be a cautionary note.  The demand for crude oil is declining, and that is affecting the production of oil in the United States.  That production, which has dramatically increased because of new methods of extraction, has made America far less dependent on foreign oil, and created an energy boom in our own country.  But production is slowing, which means fewer jobs in the energy sector, especially in places like the Dakotas.  The new energy infrastructure may start to weaken.  While Al Gore might be happy, American labor will not be.

So there is a downside to lower oil prices, and we must be aware of it.

August 21, 2015