NEW YORK (TheStreet) -- We know just how bad low oil prices are for Russia. Its economy didn't wait to implode as oil prices dropped. The ruble has cratered, the Bank of Russia is spending its dollars and people are buying iPads just to get rid of their currency. So much of the Russian economy is tethered to the price of oil and everyone seems to agree:
Russia, we know, is nothing more than a glorified petro state.
What we're less willing to admit is how much the U.S. has become just like Russia. We like to think of the U.S. as a consumer economy and we like to think that the drop in oil prices is positively and without doubt a great boon to our consumer economy. Hasn't every economist and incumbent politician crowed about the $700 per family "tax rebate" of low oil prices?
Only, it's not nearly so clear cut. The U.S. has become the third-largest producer of crude oil in the world, with a monumental daily production of 9.2 million barrels a day. This is an increase of more than four million barrels a day in the last five years alone and only a stone's throw from Saudi Arabia's leading 10.1 million barrels a day.
In that increase over the past several years, there's more than oil that's been produced. There've been jobs and homes and machinery and pipelines. Much of the great GDP growth we've seen since 2010 has been due to the fantastic rise of the oil and gas industry and their presence in shale.
Now, with low oil prices, all of that is threatened.
The negatives from lower oil prices could far outweigh the positives of a few more dollars a month in consumer's pockets. Take a look at the latest move by Schlumberger (SLB) , the premier oil services company in the U.S. It has slashed 9,000 jobs, wisely preparing for the slowdown in projects that lower oil prices will bring.
But those 9,000 jobs aren't just any kind of job. These are not Wal-Mart (WMT) or McDonald's (MCD) jobs. They represent the jobs of pipe fitters and engineers, schedulers and logistics managers. They are well-paid, middle-class jobs, worth the equal of four or more of the jobs at a retail store or a fast-food restaurant.
What else is lost in a low oil environment? Other companies that rely upon oil for their survival will get equally hit. The latest reports from Caterpillar (CAT) and its expectations on machinery orders is an early sign of this. Virtually every oil company is slashing capital expenditures for 2015, and the secondary effects of lowered spends in the oil patch mean hard times ahead for companies that help produce oil and gas. That includes chemicals, sand, water management, welders, refineries, truck sales, steel pipes and bearings -- just about any materials business you can name. All of this will reduce the growth possibilities for the U.S. economy as a whole.
None of this is really being felt yet -- but be prepared, because it's coming. U.S. production is still humming along for now, floating on projects undertaken while oil prices were still high. But the reduction of spending will result in a reduction of activity in the next six months.
That's when we'll really start to feel the negative effects of a low oil price on our economy.
More like Russia already is.