Santa's present: Low Oil Prices

So gas dropped to just under $2.80 nationally this past week. Furthermore, OPEC (Organization of the Petroleum Exporting Countries) decided NOT to decrease oil exports to the other countries in their Thanksgiving meeting. A surprising move to say the least, but understandable. The US shale industry growth in Texas and Pennsylvania is much bigger than expected; there’s a chance we might not even need OPEC’s supplies if we could set up a proper infrastructure with which to drill. The only impediment to this is the cost associated with setting up such a infrastructure.

It seems to me that Saudi Arabia is determined to maintain its place as the primary oil supplier to the world - be it for economic or political reasons. This means it’d be fine with discouraging the growth of the US shale industry by providing cheap(er) oil as opposed the billions the US would have to spend to maximize oil production. However, it’s a delicate balancing act. Other countries like Iran need the higher oil prices (Iran has a target of 100 dollars per barrel) in order to sustain economic growth. So as a whole, OPEC must balance their immediate needs for growth against the every increasing US influence on the worldwide oil industry. If they cut supplies and raise prices too quickly, it’d incentivize increased US development on the great plains, as well as increased reliance on Canada and Alaska instead. Inversely, if they don’t do anything, they’ll keep suffering. With the exception of Saudi Arabia, I can’t see the rest of the member countries agreeing to bleed dry in silence.
And it’s not just OPEC. Many countries are reliant on higher oil prices. Russia is predicted to enter a recession in its next fiscal quarter due to a combination of falling oil prices and the trade sanctions set against it as a result of annexing the Crimea for more resources. Likewise, the Chinese oil corporations will be squeezed; this will have anything but a positive effect on their slowing economy. The only thing saving China however, is that the Chinese demand for oil is increasing with each day. It’s quite likely increased consumer spending will offset this possible loss.
Contrary to the pundits wringing their hands, I believe that this drastic drop in oil is ultimately a good thing for the US economy. True, job cuts will be inevitable as energy companies like Exxon and BP try to shore up losses, but like with China, increased consumer savings will result in increased spending. While the US would lose millions in consumer spending from those lost jobs, it stands to gain millions more from the consumers who can spend. And that suggests a some happy holidays for all.