10 Sectors That Will Profit Big-Time From Oil's Crash

Oil is a dirty business with a dirty little secret: it touches almost everything about modern life.

Out of the 42 gallons in a standard barrel of crude oil, a little under half goes to making gasoline. The rest goes into a vast range of products that underpin the modern world. From plastics to fertilizers and pharmaceuticals, oil is practically a wonder substance when it comes to raw versatility. Arguably, society relies on it more than any other single substance.

All of which, it should be added, is yet another good reason to burn less of the stuff (if watching a trillion tons of Antarctica float away isn't motivation enough). The sun can power cars and heat our homes, but it can't make football helmets.

And that's where the price of oil can have some wide-ranging and weird affects. Over the past several decades the price of oil has fallen dramatically due in large part to new drilling techniques and revolutions in extracting oil from previously hard-to-reach geology such as shale and sand. In fact, it's coming out of the ground so fast that investors expect oil to dip below $40 per barrel at the rate it's going.

Here are ten industries that might benefit from those prices.

Editors' pick: Originally published July 14.

10. Shipping
10. Shipping

This one is probably the most no-brainer on the list.

Oil fuels almost every major form of transportation, and for very good reason. It is still the safest, most efficient power source humanity has ever known. In terms of raw power output per ounce of fuel, the internal combustion engine beats everything short of a nuclear reactor (and good luck strapping one of those under the hood of your Ford (F) Fusion).

Now, there are two important caveats here: First, alternative energy sources are closing that gap quickly. Second, oil is only efficient, because it externalizes all of its costs. Where a solar driver has to personally deal with cloudy days, for example, no driver has to individually pay for the costs of climate change no matter how catastrophic.

Still, because of this unparalleled efficiency cargo shipping from planes and trucks to ships and, yes, even trains, they all depend on the price of fuel. As the price of oil drops, life in this sector will get cheaper

Season Corporation (SSW) , Nordic American Tankers (NAT)  and GasLog Partners (GLOP) will benefit, along with FedEx (FDX) and UPS (UPS) . 

9. Travel and Tourism
9. Travel and Tourism

It's not just moving cargo that will get cheaper with falling oil prices. Personal transportation will get less expensive too.

Now, unfortunately for many travelers, cheaper fuel probably won't mean cheaper airline tickets. Airfare is traditionally very resistant to fluctuations in underlying fuel costs.

But this is America, home and inventor of the road trip and when we take vacations, first and foremost we like to hop in our cars. That will get less expensive as the price of oil drops, to the delight of the travel, tourism and hospitality industries. 

It's going to get cheaper to drive around the country, and that's good news for restaurants, hotels and the world's largest paper clip.

Expect Marriott International (MAR) , Hyatt Hotels Corporation (H)  and Hilton Hotels Corporation (HLT) to benefit, along with Royal Caribbean (RCL)  and Carnival Cruise Lines (CCL) . 

8. Pharmaceuticals
8. Pharmaceuticals

We'd like to say get ready for cheaper drugs, but that's probably going too far.

What we can say is that this industry will benefit substantially from falling crude oil prices.

Oil goes into many of the pharmaceutical industry's back end costs. For example, many pill capsules are made using oil derivatives. At the same time, many products such as topicals and creams rely on petroleum byproducts (for example, treatments for psoriasis often start with petroleum tar). All of it will get cheaper to make.

Expect Supernus Pharmaceuticals (SUPN) , Achagoen (AKAO) , Keryx Biopharmaceuticals Inc. (KERX)  and AbbVie (ABBV) to benefit, along with Pfizer (PFE) , Taligent (TLGT)  and Neurocrine Biosciences (NBIX) .

7. Chemicals
7. Chemicals

For much the same reason as with pharmaceuticals, the chemical industry will benefit from falling oil prices because petroleum makes up the base for many of their products.

Crude oil (and its processed form, petroleum) is an organic compound, which is used to create larger, more complex compounds. This carbon chain is highly reactive, so much so that 10% of refined crude oil goes to the chemical industry.

Solvents, topical coatings (like paint and nail varnish), a huge amount of cosmetics, detergents and many, many more products rely on crude oil. Production of all of these products will get cheaper.

Expect Hawkins Inc. (HWKN) , Ciner Resources (CINR)  and Kronos Worldwide Inc. (KRO) to benefit.

6. Agriculture
6. Agriculture

Like any other mass-production industry, farmers depend on oil prices for getting their goods to market, but there's a more specific issue here.

Petroleum products are a base for many fertilizers and pesticides. As the price of crude oil gets cheaper, it will get less and less expensive to make these critical products.

And this is no small thing. Modern farming depends on fertilizers to increase crop yield per square foot of space, and on pesticides to keep those dense crops from turning into an insect buffet. It might not seem like it, but the price of crude oil has a lot to do with keeping your salad affordable.

Expect the Potash Corporation (POT) , Deere & Company (DE) , Monsanto (MON) and DuPont (DD) to benefit. 

5. Rubber
5. Rubber

Another product that depends on oil for its manufacture, rubber will get cheaper to make as the price of crude oil drops.

That's great news for, among others, tire manufacturers, who depend on synthetic rubber for their industry. Although natural rubber is still used in some manufacturing, these days when it comes to high-volume work such as tires, the majority of production relies on synthetic rubber.

And that means crude oil.

Expect Titan International (TWI) , Dow Chemical Co. (DOW) , LyondellBasell Industries NV (LYB) and Carlisle Companies (CSL) to benefit.

4. SUVss and Trucks
4. SUVss and Trucks

Americans have a famously short-term memory when it comes to the price of gas. In particular, as prices fall we tend to respond by buying more gas guzzling vehicles.

Now, this is not a particularly rational response to the marketplace. Gas prices fluctuate, and making a five year purchase based on the price of gas today is not a great idea. It's kind of like taking on a mortgage, because you like the hot neighbors. Sure it's all fun and games now, but sooner or later he's going to delete his Tinder profile. Likewise, that truck may be cheaper to drive right now, but if gas prices climb back up next year you're stuck paying higher prices in a car that gets 18 feet to the gallon.

Nevertheless, a low price at the pump means good news for Canyonero dealers everywhere.

Expect Ford (F) , General Motors (GM)  and Fiat Chrysler (FCAU) to benefit.

3. Airlines
3. Airlines

As we mentioned above, airline prices notoriously resist changing in response to the price of fuel. This is due to a wide variety of factors, but an important one is the fact that airlines actually lock in their fuel prices months in advance. When the price of oil falls in July, that doesn't help a company that secured its fuel supply back in January.

Still, falling oil is a good thing for the airlines for two reasons: first, it sets a lower baseline for companies looking to secure their fuel prices going forward into this year and next. Second, if the price of oil remains low for an extended amount of time, then the airline will be able to reap those rewards in the form of lower fuel prices long term. They still probably won't pass those savings along to the customer, although airfares remain historically low regardless of fuel price.

Expect United Airlines (UAL) , Delta Airlines (DAL) , American Airlines (AAL) and Southwest (LUV) to benefit. 

2. Retail
2. Retail

Woe is the modern retailer. Life is hard these days for brick and mortar stores, as well as for everyone who enjoys the luxury of simply running an errand instead of waiting two to three days for delivery of a product bought sight unseen.

Happily cheap oil means only good things for retailers of every stripe (digital and physical). Cheaper shipping mean that their costs will go down across the board, while less expensive energy for manufacturers will actually bring down the costs of most products. Customers, meanwhile, will be slightly less reluctant to drive on an inexpensive tank of gas, helping out some physical shops by a small degree.

Overall, this is good news for people who make a living selling things bought and processed.

Expect Sears (SHLD) , JC Penney (JCP) , Amazon (AMZN)  and Macy's Inc. (M) to benefit. 

1. Light Manufacturing
1. Light Manufacturing

Speaking of goods bought, sold and processed, manufacturing will get cheaper in an age of inexpensive oil.

First, prices will go down for everyone. Manufacturing is an energy-intensive concern, and as oil gets less expensive it will get cheaper to run all of the machines and logistics involved in virtually any factory.

For light manufacturing, industries that rely heavily on plastics in particular, that benefit will double for a simple reason: oil is a key ingredient in making plastic. Although these days natural gas has supplemented petroleum as the key feedstock for plastic, crude oil is still a major element in the process. That means anyone who builds things with heavy plastics components can expect their prices to drop.

Which… is kind of amazing when you consider just how essential plastic has become to 20th and 21st Century life. It's the wonder material, and it's all thanks to oil. So… we really should find better things to do with barrels of this stuff than burning them.

Expect Berry Plastics Group (BERY) and AEP Industries (AEPI) to benefit. 

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