The Importance of The Energy Industry For Wall Street

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The current crisis in the energy industry (led by weak oil prices) could have had a worse impact on the stock market if it had happened few years ago

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Surprisingly (or not), the energy industry is less and less important for Wall Street.

Take, for example, the weight of the industry in the S&P 500. You will find out something interesting:

energy S&P 500

The importance of the energy industry is way below the pre-crisis levels.

This means that, if the current collapse in oil prices had occurred few years ago, the impact of such crisis would have been way, way, way worse than what we are seeing now (and what we’ll see in the coming weeks).

Yes, in 2008 oil prices fell too, but that was not an “energy crisis”, it was a financial crisis. Let’s not make confusion between this two things: in 2008 lower oil prices were a consequence of something else, now lower oil prices are more a cause rather than a consequence.

 

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