Us peasants are rejoicing over cheap gasoline and going about our merry way thinking now I know where the money for Christmas is going to come from..Very true, those with much of a commute have a lot more bucks in our pocket. Seldom does it cross their minds that this fall in oil is a bad thing but the truth is it could be.
Oil companies buy derivatives to protect against falling prices , so they buy derivatives to guarantee the future price of their oil so they really don't care if the price of oil falls. They are protected , so the question is who eats the losses... In this case the big six banks and they hold enough of these contracts to force them into default and if that should happen the whole system goes down.
HERE'S THE STORY