$200 oil would make the US more competitive relative to China for domestically-consumed goods. But the standard of living in absolute terms would get clobbered.
taxes on gas are absurd, they will not get a tax holiday ever. Each district will cry about the lost revenue. Gas actually feels cheap relative to oil at the moment with oil hovering around $100 per barrel. http://www.api.org/statistics/fueltaxes/upload/gasoline-diesel-summary.pdf
Alright, what about this: say there is alternative to replace crude next week, as such crude drop to $35. The biggest sub-deficit spending w/i the US deficit is crude. Now, w/ this alternative substance, we have a surplus. So now the manufacturing costs of a lot of items will be significantly reduced. Price of RBOB will be a lot cheaper, and as such consumer has more $$. Some will spend more. Their spending drives 70% of the economy. Wouldn't this scenario fix the economy?
Why do you think they're researching nuclear fusion? Of course that would fix the economy. It would fix the world. It's just way off far into the future at this moment.
No it would not, because fusion will still produce some radioactive materials as an inevitable byproduct of the process which must be stored in a stable environment until they are safe - in other words, Yucca Mountain must be opened. This issue is actually not a technical issue per se - ask the French about their national power program. In tems of re-processed spent fuel and low level radioactive waste this is an emotional issue born of ignorance.
Then we could have an epic war against Canada/Saudi Arabia. Seriously, there's no way that crude hits $35 (or some other very low level) and just stays there. It's too correlated with stocks and the economy. It hit around $30-35 as everything bottomed in early 2009, but rallied hard when everything else turned around. This isn't like the 1980-1990s, where oil can stay near a bottom while everything else is rosy. Something major would have to change all the intermarket relatinships for that to happen. If oil hit $35 and didn't budge (or went even lower), it means we're in real dire straits.
Okay, the original question is only hypothetical, so don't bother guess if fusion has anything to do w/ this After all, there are all kinds of explanation for this, for e.g., 1 of the very large oil co. is encouraging some of their employees to work at home, as it reduces their office rental space, and some employees doesn't need to do face to face interaction w/ other. If a lot of people take that approach around the world, there will be a lot less driving to work and a lot of co. will save a lot of $$ for rent
Oil was below $10/bbl in the late 90's....it can go low and stay low for a lot longer than one can imagine... The second largest source of income for the US Treasury is energy related: royalties, lease sales etc etc XOM, as an example, has more than 1500 institutional owners as per Yahoo fiance. The loss would be felt throughout the economy in mutual funds, pensions etc etc. The number of energy related layoffs would more than off set any gains. Be very careful what you wish for: You may get it. It would be devasting to the economy. SteveD
The collapse of communism in Eastern Europe is what got oil that low and kept it there for such a long time. Unless China or the eurozone collapses that's not going to repeat.