While we have been learning about networks and how they relate to each other and the ins and outs of networks, I have been monitoring the stock market for several weeks. One thing I have become more aware of due to this class was how stocks are so connected and dependent on each other. When oil prices plummeted at the beginning of the year, the rest of the stock market fell drastically too. This was the lowest year beginning in the history of Wall Street with major companies losing billions of dollars in stock worth.
One of the highest losers was Apple (AAPL) which went from $120 and change right before the end of the year to a low of $93 last week. This added up to a loss of around $30 billion just in Apple stock. This was a huge loss and a shocker to many of the investors stockholders. But Apple’s stock loss was newsworthy because it is such a large and well-known company. The real losers were the energy companies.
Every energy company in the market was losing money in big percentage points. And I mean BIG. Ultra Petroleum (UPL) lost 25%, EXCO Resources (XCO) lost 28%, Comstock Resources (CRK) lost 38%, Southcross Energy Partners (SXE) lost 51%, the list goes on. This is because the price of oil has violently declined. Last year oil was over $100 per barrel. Last week oil hit $26 per barrel for the first time in two decades. The price of oil is so low because the production of oil is so high and cannot be stopped. Shale oil technology has greatly impacted standard practices of producing oil. Unlike other kinds of oil wells, shale oil wells cannot be turned off once they are drilled. Therefore, the price of oil can no longer be as controlled and regulated by controlling the amount of oil being produced. This, in addition to Iran boosting their oil exports since the nuclear deal was signed, has made oil prices plummet recently.
Sure there are people that say the stock market isn’t completely driven by the price of oil. But with oil production very high and the price very low, smaller energy companies that relied on oil having a high markup just to stay afloat are now drowning, hoping shale oil production ends soon. Cheap gas is great now and no one really can complain about that, but once it affects phone companies, the majority of iPhone users will definitely have something to say — or tweet, snap, insta, post, like, blog, share…