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What Falling Oil Prices Could Mean for You

At the beginning of the year, most of us reassess where we are in life and make resolutions. This is especially true when it comes to financial planning. Financial planners in Perth are quite busy at this time of year, helping our clients reassess and re-calibrate their goals.

This year, many of the questions revolve around falling oil prices: how long they will last and how they will affect our economy. We recently found a piece in the Sydney Morning Herald that contained a nice summary of current information along with quotes from some respected economists.

What Falling Oil Prices Could Mean for You

The Fall in Oil Prices: How Big is It?

On 19 June 2014, the price of oil was $115 USD per barrel. As of 13 January 2015, the price has fallen to $47.43 USD per barrel. Consequently, Societe Generale and Goldman Sachs have both lowered their oil price forecasts.*

When oil prices fell in the 1980’s and 1990’s, there was a rise in the US economy. This resulted in a corresponding rise in both the global and Australian economies. This has caused many fund managers to predict rising share prices for the latter portion of 2015.*

What Our Economist Says

Shane Oliver, chief economist for our parent company, AMP Capital, believes that shares will undergo a market “correction” of between ten and fifteen percent during the first part of 2015, but that shares will eventually go higher by the end of the year.*

Mr Oliver says that the the current effect of lower oil prices for investors is “negative” due to its negative effect on those who produce oil and gas. He feels the negative effects may go on for a while longer due to the possibility of “some sort of blow up among energy producers.”*

Talk to the Professionals

To talk to a professional financial planner, call our Perth office: 08 6462 0888.

*Sydney Morning Herald, 13 January 2015. “Oil Price Fall to Fuel Shares Later This Year.”