The buzz: Bartiromo on plunging oil's fallout

Oil prices plummeted almost 50% in 2014. And while the slide has been one of the biggest stories in business this year because of its positive impact on the economy, less has been said about the dark side of cheap oil.

The old saw that cheaper oil and gas are a big positive for consumers is true – it acts as a tax cut and puts extra money into our pockets. After all, if it was costing you close to $100 just to fill up your SUV last year, now that same tankful costs closer to $55, providing a nice cushion to use the rest of that money elsewhere and boost the broad economy.

Gas prices are below $2 a gallon in at least two states right now, which has been celebrated by economists. So why then has the sell-off in oil caused such volatility in the stock market? Oftentimes when oil declines, oil stocks follow suit and take the entire market down with them.

It's because there actually is a downside to cheap oil, particularly as it relates to economic growth and job creation. Take for example the heavy energy states that have been the job generators for the U.S. Consider that 40% of all new jobs created since June 2009 have been in Texas. Or that In 2013, the city of Houston had more housing starts than all of California. Much of that growth is due to oil.

"Cheap oil does not have the stimulating effect that you think it has," says Daniel Yergin, Pulitzer prize winner and vice chairman of IHS Group. He cites former Federal Reserve chairman Ben Bernanke's recent comments that much of the growth in the U.S. economy these last few years has been directly due to the energy revolution in this country. The oil and gas boom has added $300 billion to $400 billion annually to the economy. Some argue that without that boom, GDP would have been negative and the country in recession. "Layoffs will soon start, as companies cut budgets by some 15%-20% because of the lower price of oil," Yergin says.

Expectations are that 35%-40% of total capital expenditure growth is related to energy. An expected capital expenditure boom still hasn't materialized to boost the economy, and low oil makes it even less likely that will happen because oil-related companies are less motivated to invest when they are getting so much lower revenue for their product.

The shale and oil and gas revolution has been the country's biggest single creator of solid, middle-class jobs. According to a recent report from the St. Louis Federal Reserve, nearly 1 million Americans work directly in the oil and gas industry, and a total of 10 million jobs are associated with the industry. The Dallas Federal Reserve lists total payroll employment in each of the 12 Federal Reserve districts and Texas, which is the Dallas Fed's district, shows the largest growth with 1.8-million oil related jobs there. That is followed by Minneapolis, which includes North Dakota and the Bakken oil play. And a total of four districts have not gotten back to where they were in 2007 and another four have seen very little growth even after eight years.

So it's understandable that so many people do not feel the economic improvements that we talk about every day because where they are, it still feels like it's a recession. Reuters reported that there was a 40% decline in new well permits issued across the country in the month of November. With prices cut in half, it does not make economic sense to drill. This is a major issue because since December of 2007, shale oil states have added 1.36 million jobs while non-shale states have lost 424,000 jobs.

The impact of oil has already begun hitting some banks that are tied to energy lending in Texas. Shares of a number of regional banks have sold off because they are directly linked to lending to energy companies. During the third quarter conference calls, CEOs of several banks said prolonged lower prices would be a concern because lower drilling costs and delays in some projects cut into revenue.

Many companies are hedged going into the New Year, and that shows that these are long-term worries for them. We won't see the spigot on business turn off early in the year, but a prolonged period of low prices, below $55 a barrel, is a definite negative for the energy industry and its job-creating opportunities. The financial companies with the most energy-related exposure as a percentage of total loans includes BOK Financial, Cullen/Frost Bankers, Hancock Holding, Green Bancorp and Comerica.

We have begun to see an impact on jobs. Alaska, for example, recently reported a spike in jobless claims, as did West Virginia. There is also a hit to overall Standard & Poor's 500 earnings. Richard Peterson at S&P Capital IQ says 2015 earnings growth is expected to be above 8.4%. However, when you exclude the energy sectors, that earnings growth rises to 11.4%. So we will likely see earnings growth dampened by a further cut in profitability at energy companies. The pressure on energy is expected to lead to consolidation. Already Halliburton announced a deal with Baker Hughes to combine in the second-largest deal this year, adding to a record year for energy mergers and acquisitions.

Having said all of that, there is no doubt that cheap oil is a positive for consumer retail, and particularly right now that in the most important period for retail: the holidays. But it cannot be ignored that the slide in oil cuts both ways when it comes to economic activity. The New Year kicks off with affordable oil coupled with a still strong shale and energy revolution in the U.S. But whether that revolution continues vibrantly as oil continues to plummet is an important question to consider.

Maria Bartiromo is anchor and global markets editor at The Fox Business Network. Her morning show "opening bell" is seen weekdays 9 a.m.-11 a.m., ET on FBN. Reach her on twitter @mariabartiromo or @sundayfutures