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The Implications of Falling Oil Prices

Steve Liesman

with Steve Liesman, Senior Economics Reporter at CNBC, Squawk Box

Oil prices are down 40% since June 2014, and continue to slide on oversupply and fears of a weakening global economy. Decades ago, oil fell to $10 per barrel causing production to consolidate and setting the stage for a post-consolidation rebound in prices with supply finely-tuned to match demand. As U.S. oil production grows and prices slide, are we in for more consolidation? And how is the sharp drop in oil going to impact producers that can’t profit at lower prices? Will small players win or will the big guys prevail?

A lot of oil projects were financed with high-yield debt so failures could have spillover effects on the bond market. Lower oil prices are also lowering inflation, with the Producer Price Index down 0.2% in November, prompting concerns about a deflationary environment. On the flip side, lower gasoline prices help consumers. So should this sharp drop in oil prices be cause for concern, and have we hit bottom yet?

I've been an investment strategist and adviser for over 35 years, leading with a mission of unbiased advice to educate and protect listeners on my weekly radio show on NPR affiliates nationwide. I have been named a “Top 100 Wealth Advisor” by Worth Magazine and “Top Advisor” by Reuters.