World
Cheap oil can actually help US economy
Where are oil prices heading? Are they going towards $20 per barrel or is the worse of the capitulation in the energy markets behind us? Most fundamental and technical factors still seem to be pointing towards further downside in oil and the macro forecast is thus "lower for longer".
 
US equity markets have begun the year on an extremely weak note. Oil breaking the $30 per barrel-mark has also added to the mood dampening, as it will likely compound job losses in the energy sector and add to the persistent deflationary trends. 
 
Some are even calling US Fed Reserve Chair Janet Yellen to delay the next 25 basis points rate hike by at least six months. However, it is most likely that low oil prices will leave the US economy unscathed.
 
The US has become a major player on the supply side of the global oil market. US crude production now ranks third in the world, behind only Russia and Saudi Arabia, and it is also the world’s largest producer of natural gas. However, unlike other major oil producers, the energy sector is not a significant portion of the overall economy. 
 
Oil and gas production accounts for less than 2 percent of its GDP and its share of employment is even smaller. There are fewer than one million people (or 0.8 percent of the workforce) involved in the energy business, including oil and gas extraction and support, pipeline construction, mining field machinery manufacturing, and petroleum refining. 
 
Although investments in oil and gas structures and equipment soared during the oil boom, even at its peak, the sector comprised just about 7 percent of total business investment. The hit to investment from the recent additional decline in energy prices will be limited. The bulk of the likely oil industry investment cutbacks already occurred in 2015. 
 
As per Citigroup estimates for fourth quarter, real investment in energy equipment and structures shrank to the lowest levels in the past 20 years both in levels and as a percent of GDP. The new lower level is consistent with the maintenance investment associated with those periods of time when petroleum prices were at or below current levels. From the current levels, there is not much risk of significant drag from this sector.
 
On the employment front, most "oil states" with the exception of Wyoming, North Dakota and West Virginia are still seeing positive employment growth. For a crucial state like Texas which produces 40 percent of the total US oil, the Dallas Fed estimates the job losses associated with a 50-percent drop in oil prices would cause job losses of the size that would be less than one month's increase in US payroll employment.
 
Although the buzzword is energy independence, the fact remains that the US will be a major net oil importer until at least the end of this decade. Just like China, India and the Euro area, it stands to benefit from lower crude prices. 
 
For example, in September, the drop in oil prices lowered the US monthly petroleum bill by $9 billion, which represents a yearly net transfer from foreign oil producers to US energy users (primarily consumers) of more than $100 billion (0.8 percent of annual US disposable income). 
 
If the price decline persists and the attendant windfall is perceived by consumers to be permanent, the additional drop in oil prices likely will raise consumer discretionary income by another $42 billion according to Citigroup estimates.
 
For US bulls, cheaper oil going forward should not be a cause for worry but rather a ray of hope within an economy which is increasingly starting to look more and more fragile.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Beat this! You just can't have more than 200 friends on Facebook
London : If someone claims that he or she has over 1,000 friends on Facebook, he or she is probably lying.
 
According to an interesting research, the average number of real close friends people have on the social networking site is less than 200, and here too women triumph with more genuine friends than men.
 
According to psychologist professor Robin Dunbar from the University of Oxford who conducted two surveys, among regular social media users, the average number of friends they had on Facebook was 155 in the first survey and 183 in the second.
 
Women had more friends than men (in the first sample, women averaged 166 and men just 145 friends; in the second, it was 196 vs 157) while - perhaps unsurprisingly - older generations had fewer friends than younger ones, Dunbar found.
 
According to him, social media certainly help to slow down the natural rate of decay in relationship quality that would set in once we cannot readily meet friends face-to-face.
 
"But no amount of social media will prevent a friend eventually becoming 'just another acquaintance' if you don't meet face-to-face from time to time,” Dunbar explained in a paper published in Royal Society Open Science journal.
 
"There is something paramount about face-to-face interactions that is crucial for maintaining friendships. Seeing the white of their eyes from time to time seems to be crucial to the way we maintain friendships,” he added.
 
Offline, research has given rise to what's called the Social Brain Hypothesis. This says that our brain's ability to process multiple relationships creates a natural group size of 100-200 people for humans.
 
This size is also constrained by the time required to maintain relationships - we only have so much time to devote to meeting or talking to people.
 
Social media may seem to be a way to make and maintain hundreds of friendships.
 
It has been suggested that social media might overcome the constraints because posts, tweets and pictures allow us to talk to many more people at the same time even if the interaction is not direct.
 
This prompted Dunbar to carry out two surveys of more than 3,300 people to see whether using the Internet really means we can have more friends.
 
The first survey group, made up of regular social media users, considered only 28 percent of their Facebook friends to be “genuine” (close) friends.
 
While a few people did have much larger groups of online “friends” on Facebook, they had similar sized support and sympathy groups to others.
 
This suggests that when social media seem to allow someone to have more friends, it is because looser acquaintances were being included in the 'friend' category.
 
"The research shows that face-to-face interaction is essential for truly authentic relationships and that shares, selfies and 'likes' are no replacement for the bonding that takes place while sharing food, experiences and anecdotes,” informed Sue Fudge, director at Dorset bakers Thomas J. Fudge's.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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15 killed in terror attack at Pakistan varsity: Report
Peshawar : At least 15 people, including two gunmen, were killed in when terrorists stormed the Bacha Khan University in Pakistan's Khyber Pakhtunkhwa province on Wednesday, Dawn reported citing Edhi Foundation sources.
 
The gunmen opened fire at students and faculty members who had gathered in a school on the varsity campus for a poetry recital to commemorate the anniversary of the activist and leader after whom the school is named.
 
There were conflicting reports from the site initially with CNN news placing the toll at seven. "It's not yet clear how many of the dead are attackers and how many are civilians," a CNN report said.
 
State-run PTV quoted a police official as saying that three armed men entered the university premises and opened fire. 
 
Heavy firing took place inside Bacha Khan University in Khyber Pakhtunkhwa’s Charsadda town as security forces took on the armed assailants in a gun fight, witnesses said. Several people also heard explosions, a media report said. 
 
Television reports said a large contingent of security forces rushed to the site and engaged the assailants in a gun battle.
 
A woman inside the university told Dawn that intense firing was under way.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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