The latest slump in world oil prices should help push petrol prices even lower and get tills ringing for retailers.
Brent crude oil prices fell nearly six per cent on Thursday to below $US35 a barrel, hitting a fresh 11-year low.
The latest slide sparked a widespread selloff in energy companies shares on the stock market.
But the it's not all bad news, with Australian consumers likely to be big benficiaries of lower oil prices.
"For the economy, lower oil prices turn out to be more positive than negative," CommSec chief economist Craig James told AAP.
As a net importer of oil, a falling price will boost Australia's terms of trade. Australia's economy is expected to grow about 2.5 per cent in 2015, which many economists consider to be a solid performance.
Consumers, retailers, transport companies and airlines are turning out to be among the biggest beneficiaries from the oil slump.
Consumers have seen fuel prices fall sharply, with petrol retailing near $1 per litre in Sydney this week. With fuel being among the biggest household expenditures, having to fork out less at the pump has allowed consumers to channel the extra dollars elsewhere, analysts said.
Last week, Harvey Norman chief executive Katie Page confirmed the link, saying lower petrol prices were an important stimulant for retail sales in Australia, and retailers are seeing the immediate impact in their stores.
Investors in airlines and transport companies are also reaping the advantage. Last month, national carrier Qantas said it is on track for its biggest ever full year profit, helped by a lower fuel bill, just two years after recording its biggest ever loss.
The latest slide follows the face-off between Saudi Arabia and Iran, which could extinguish any chance of a deal among major producers to cut production.
US government data also showed a surge in petrol supplies, signalling a likely slowing down in demand.
Mr James says he expects oil prices to flatten out to between $US40 to $US50 a barrel in the medium-to-long term.
However the current slide towards $US30 is wreaking havoc in the energy sector.
On Thursday, shares in Origin Energy, Santos, Oil Search and Woodside Petroleum were trading between three and seven per cent lower. The companies had already lost between 25 to 70 per cent of their market value in 2015.
Over the past year, oil and gas producers slashed costs, shut down exploration projects and cut jobs in an effort to stay profitable.
"The lack of earnings stability from any company involved in exploring, producing, storing or servicing the oil sector makes it one to avoid for the conservative investor," Rivkin Securities chief executive Scott Schuberg said.
The volatility has also depressed prospects for dealmaking in the sector.
Earlier this week, global consultancy IHS said global oil and gas deals slumped 22 per cent in value in 2015, due to a disconnect in expectations between buyers and sellers. It expects M&A activity to pick up this year.
"A lot of individual assets are attractive, but the companies themselves are laden with significant debt," CMC Markets' chief strategist Michael McCarthy said, summing up the key issue hindering M&A activity in the struggling sector in Australia.
"We are going to see a pickup in M&A only when markets feel that oil prices have stabilised," he said.
