“I lost 12.5 million dollars last year but it really raised the trust in the brand.” — Jim “Mattress Mack” McIngvale, March 17, 2015, at The After Hours Network.
Can you make money during an economic recession or industry downturn?
Of course you can.
The 10 Domino Principles provide a framework for taking control of our lives and businesses, navigating the present, and shaping an exceptional future. Over time, I am introducing and applying the 10 Domino Principles through articles on this blog. Today we are going to delve into Domino Principle #2, the principle of Determined Proactivism.
Over time, I’ll be introducing readers of this blog to a series of 10 specific Domino Principles. These Principles provide a framework for taking control of our lives and businesses, navigating the present, and shaping an exceptional future. In this article, I’m using the news of the past week coming out of Marathon Oil to introduce “Domino Principle #4: Distress Potential.” (The Domino Principle framework is still evolving and somewhat fluid. Things may change.)
“It may be taken for granted that, rash as the Americans are, when they are prudent there is good reason for it.”
— Jules Verne, Around the World in Eighty Days
Who wins and who loses from the drop in the price of oil? That is a complex question, one which we will continue to explore on The Domino Principle for some time to come. Today we take a look at it from a broad geographic perspective, examining which areas around the world win or lose overall, heavily referencing 13 articles I’ve found which address the topic in great depth. In each case I provide the link to the source material for a fuller explanation.
In yesterday’s post we looked at the price of oil from a historical perspective and discussed the factors leading to the steep decline over the past year.
So today let’s take a look at what might happen to the price of oil and gasoline in the future.
First a disclaimer… I’m not an energy industry analyst. I’m not a stock or commodity trader. And until a few weeks ago I’d never been terribly concerned with nor knowledgeable of the factors that influence short term changes in the price of oil or gasoline. If you think being an “expert” is important, just read this December 11, 2014 article from the Wall Street Journal: WSJ Survey: Oil Prices Are Near Their Bottom. The “experts” then predicted that the price of oil would not go any lower than $60/barrel, and would rise to around $65/barrel by the end of the year. Instead, prices continued to drop to around $45/barrel by mid-January, rebounding (at least for the moment) to $50.56/barrel today as this article goes to press.
“The frackers did labor and toil
To extract it out of the soil
But OPEC production was high
And demand less than supply
So down went the price of the oil.”
Before we start looking at the repercussions of the precipitous drop in the price of oil over the past year, let’s first set the stage in this post by putting the price drop into an historical context and understanding the factors that led to its occurring.
This graph shows historical crude oil prices per barrel for the past 10 years, trading at $49.07 as I post this article: