As oil prices continue to drop, certain industries stand to
benefit. These fall into two main categories. The first should come as no
surprise: industries, like airlines and transportation, for which oil is a
direct and significant cost (lower oil prices improve their profitability). The
other industries that benefit from lower oil prices are those that are
dependent on consumer spending. When consumers spend less on fuel, they have
more disposable income for other purchases.
To properly evaluate how these industries fare during low
oil prices, we must first set a time period that corresponds with the fall of
oil prices. On June 20, 2014 crude oil reached a multi-year high of over $107
per barrel. Thirteen months later, on July 29, 2015, crude oil was trading
around $49 a barrel, a decline of 55%. Over this period, the Standard &
Poor’s 500 Index (S&P 500) advanced 7.4%, while sectors that benefit from
lower oil prices, such as consumer discretionary and consumer staples, outperformed
the S&P 500 with gains of 20.5% and 10.9%, respectively. In this article,
we’ll discuss the five industries that have benefited the most from low oil
prices.
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