what effect does the market price of oil have on the economy?

Answer 1

Oil prices, when they're going up, are often likened to a tax on consumers (and business, for that matter) since for most of us, it's not a question of "can we afford it?" It's more just a case of "shell it out", just like a tax increase. Similarly, falling oil prices are likened to a tax cut, putting more "disposable income" in consumers' (and businesses') pockets, to spend (or save) on other goods & services, thereby increasing overall economic activity. There is a somewhat counter-factor related here, though, in that increasing oil prices generally are favorable to, say, oil company profits, which may in turn lead them to take steps to further economic activity while, going the other direction, if/as oil company profits fall (because of falling oil prices), these companies may take steps to cut back on economic activity, including possibly laying off workers. But overall, much more the case that increasing prices are like a tax increas; falling prices more like a tax cut.

Answer 2

Look around the room at everything that runs on electricity.

Look around the room and count everything made of plastic or other oil-based materials.

Now ask the question again.