Editor's pick: Originally published Jan. 13.
Oil prices have been in a free-fall, even dipping below $30 a barrel. While low oil and gas prices might be good for consumers, really low oil prices are usually a harbinger of terrible outcomes for the stock market -- and the economy.
In fact, oil has been telling us a story about the rest of the market that investors only now are starting to hear.
We all need oil and gas to heat our homes, run our cars and keep the lights on at our places of work. Every one of us has a cost we pay for the energy that we use, whether we can see it in a home electric bill or whether it is more hidden, such as in the price we pay for our food that need to be shipped to our local stores and refrigerated when they get there.
Therefore, the usual reaction of economists to dropping energy prices is optimism -- lower prices translate to lower costs for most consumer goods, and greater spending power that can drive higher sales and a robust stock market.
The modern history of oil prices and the stock market tells a different story, however.
Low commodity prices in general, and particularly oil prices, signal that lower growth is on the horizon and businesses will not be expanding as quickly. Sometimes, they can even foretell the beginnings of a major stock market crash.
In 2008, for example, oil began to fall after making highs in July, helping to kick off a global panic in equity markets that culminated in the stock market collapse later that year.
There are many reasons to be even more wary of dropping energy prices in 2016 than in 2008. Since then, the United States has become a major energy producing powerhouse, deriving much of its economic growth from a shale boom that has delivered more than five million more barrels a day of oil since 2010. Those oil and gas producers also fueled growth in energy services, pipeline and transport companies -- and literally millions of jobs with them.
With energy prices now expected to stay low for at least another year or more, many of these companies will need to restructure or even go out of business. So many of those newly created jobs will be lost.
Oil prices have been dropping for more than a year now, but it seems the stock market is only now recognizing the economic disaster that really low energy prices can create.
Much of the pessimism in the stock market now is linked to the collapse of oil prices over the past month.
That's because the benefits to the consumer of cheap gas is not enough to drive an economy that has become more and more reliant on energy production and the jobs that come from it.
It doesn't seem likely that we will see stocks go higher, or even stop going lower, until oil finds its way up again. And that could be quite a while yet.