Record-low oil price brings holiday cheer

The price of crude oil plunged Friday after Organization of the Petroleum Exporting Countries (OPEC) announced it would not prop up steadily declining prices amidst concerns of overproduction.

It dropped 7 percent to $68 a barrel in the biggest one-day drop in three and a half years. Oil is now cheaper than any time since 2010. 

{mosads}Bad news for oil companies, however, is good news for consumers ahead of the holiday shopping season as slumping energy prices means consumers will have more money in their pockets to spend.

Retailers such as Wal-Mart, which saw its stock rise 3 percent on the day, and Amazon, which bumped up 1.5 percent, rallied on the energy news.

Airline stocks soared Friday as investors anticipated that carriers would benefit from lower fuel costs, which may translate into cheaper tickets for travelers.  

Southwest Airlines climbed 6.5 percent and Delta Air Lines advanced 5.5 percent.

Oil companies got shredded on a day when the broader stock indexes stayed relatively flat.

Schlumberger, the world’s leading supplier of drilling technology, sank 7.4 percent, while Exxon dropped more than 4 percent and Chevron tumbled 5.4 percent.

The Dow Jones Industrial Average moved up half a point, the S&P 500 fell back 5.27 points and the Nasdaq improved 4.3 points.

The Dow ended November up 2.5 percent while the S&P and Nasdaq improved by 2.5 percent and 3.5 percent, respectively.

This marked the sixth straight week of gain for the major indexes, according to Reuters.

Dropping oil prices may be good news for consumers but it raises concerns for domestic shale oil producers.

Shale oil companies such as Denbury Resources, which fell 15 percent, experienced double-digit losses on Friday.

Some experts say tumbling oil prices aren’t necessarily good news for the U.S. economy because energy companies comprise a substantial portion of it. The oil and gas industry has created 400,000 jobs since 2003, according to Mark Mills of the Manhattan Institute.

Barron’s reported Mills’s estimate last month.