Crude oil is currently at $47.12.

Whilst most people especially drivers, airlines and freight companies are enjoying cheap fuel prices, the oil industry is responding to its much lower profit margins with significant cuts in expenditure and employment which in turn is hurting economic growth.

Low oil and gas prices are positive for the economy because they reduce costs of transport which also reduces the costs of goods for consumers and business. In the U.S., economic growth was up in the second quarter of the year which is believed to be partly fueled by consumers more disposable income which is saved on gasoline which can be instead spent at stores and restaurants.

However with oil prices down by 50 percent from last year most oil companies are making cuts which is also offsetting some of this good news. One prime example is Exxon Mobil which said on Friday it cut spending by $1.54 billion in the second quarter, while Chevron stated it would be making 1,500 workers. Just six months ago the hectic U.S. oil and gas boom was assisting the country’s growth however now it is pulling against the economy.

The chief global strategist at J.P. Morgan Asset Management, David Kelly, said earlier this week that a $29 billion decrease in oil mining and exploration work in the U.S. cut economic growth by 0.7 percent in the second quarter which is to be considered a large amount for an economy that grew just 2.3 percent.

In Canada the economy contracted by 0.2 percent in May according to Statistics Canada, indicating its fifth consecutive month of decline.

“The oil and gas sector accounts for 25 per cent of all of our capital spending. It’s not the largest driver of manufacturing activity in Canada, but it’s been responsible for a lot of the growth in recent years,” said Mike Holden, director of policy and economics at Canadian Manufacturers and Exporters, an industry association. “You cut out that growth driver and suddenly you’re left in a situation that looks like this.”

The industry is suffering therefore layoffs are increasing. Royal Dutch Shell and Chevron are just two companies which have announced that they will be reducing their workforce due poor profits, CEO John Watson of Chevron stated that the cuts “reflect lower activity levels going forward”. At three of the major oil and gas service companies the number of layoffs is close to 60,000 with further layoffs being implemented in the near future.

BP’s profits are also down by 64% between the months April to June and the CEO Brain Gilvary on Thursday told investors that the company will have to continue with downsizing the workforce and that “you’ll see more of that before we get to the end of the year”.

Exxon Mobil has also reported two straight quarterly losses with profits falling by half, the lowest profits since the recession of 2009.

Following the announcement of Exxon and Chevron results on Friday, the two companies fell 4 percent on Friday.

The oil companies are in some ways victims of their own success. By producing such large amounts of oil and gas through technological advances it has caused prices to crash.

IHS Energy analysts predicted on Friday that the market could see further declines in the price of oil. IHS says oil will have drop to a low of $40, stay there for “several months” before U.S. production growth slows with many companies going out of business for the supply glut to ease.