Eurozone and the US Economy

In an election year, news coverage focuses mostly on local and national politics so it can be hard to follow world news. Since the 2008 financial crisis, however, smaller European countries including Greece and Ireland, as well as major Euro players like Spain and Italy have been struggling to stay afloat. Now the Eurozone is teetering on the edge of collapse with countries like Greece threatening to leave and revert to their old currency. What is happening on the global stage and what effect does it have on U.S. gas and oil price?

Recently, the BBC reports that the Eurozone agreed to a deal that relaxed strict European lending laws that have made it so hard for struggling countries to get back on track. These measures should help Italy, Spain, and Greece; however, some experts worry that Greece is only postponing a decision to leave the Eurozone. By and large, though, this spells good news for Europe and global stock markets. Markets rose after the deal was reported.

While Europe seems to be getting a handle on finances, its countries are a bit stuck in the mud, so to speak, when it comes to growth. This means less U.S. trade and a sluggish American economy because Europe’s our largest trading power. Other ways Europe affects our economy:

  • U.S. banks invest in European banks
  • Stagnant European market spells reduced profit for American companies
  • Stocks and money markets are losing value

As the U.S. recovers financially, chaos in Europe could lead America back into recession. Financial drama on the global stage makes everyone nervous because it hits close to home. There’s another way the Eurozone crisis can affect Americans: Oil prices that impact everything from the gas in your car to the cost of the diesel fuel for the generator that can power your AC in a summer brownout.

After this great deal hammered out in Europe, oil prices stopped their 90-day downward slide and rose over 9%. At the same time, gas prices hit a 6-month low. Sanctions on Iranian oil and a tanker leak in the North Sea mean oil supply will be limited for some time. Will oil and diesel prices climb higher? Are you prepared to foot the bill if they do?

Let’s face it: Summer is a time of high energy demand. When the grid overloads, hurricanes loom large, or storms knock out power lines, generators can keep your company operating and power that much-needed AC. Natural gas generators cost less to operate than diesel generators. With oil prices climbing and European instability having the potential to make or break the cost of diesel, which type of fuel do you want to be putting in your generator?

-Mark