system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: Why is the recent drop in gas prices a bad indicator for the overall economy?

I tried to read several news articles about this, but none of them actually explain it. 

**Edit:** To clarify, I have a pretty good understanding of *why* the price is going down. Supply/demand, speculation, liberal conspiracy theories and all that jazz. My question is how does this impact the economy negatively, as so many news articles seem to indicate? In other words, what are the consequences of all this?
gpt
It's because oil prices are a fairly good indicator for how well people think the economy is doing. 

The central idea is that everyone, and every business uses some form oil to conduct operations. As such, higher oil prices tend to reflect an increase in business activity and lower prices reflect a slow down. (if 1 million people lose their jobs, commutes are reduced, production is reduced, demand for oil falls and then prices fall.)

Now the tricky part is that the oil price you see on TV is actually the price a few months down the road. The oil price displayed on the news is what's know as an oil future, basically someone is buying a contract to receive oil a few months from now at whatever the price is expected/predicted to be. This allows for a magnified effect on oil prices due to the effect of speculated trades.

These trades are purely based on what an investor think the price of oil will be. They reach this conclusion by looking at data from various economic sources in order to gauge the economy and then buy/sell oil based on what they think will happen next. These trades then have a huge effect as the increase/decrease in price will only encourage more speculative trade that will further fuel the price increase/decrease.

**TL;DR: Overall gas prices themselves don't necessarily have a large impact on the economy, but the economy has a large impact on gas prices, that's why so many people look to it in order to gauge economic performance.** 

**Oil is a good indicator for how well the global economy is doing, but the "indicator" can be affected due to speculative trading.**