Oil is freaking out the stock market

Markets have taken a nasty turn in recent days as investors grow anxious that the tumbling oil prices will spillover to the broader global economy.
Oil's slide has been relentless, having tanked another 3% Tuesday to below $55, a level not seen in five years when the economy was in dire straits.
True, slumping oil means a break at the pump, which most economists say is equivalent to a mega tax cut or stimulus program. But there is a tipping point when oil gets too low. Eventually, the benefits start to get outweighed by the costs.
Some investors and economists are asking: Are we at that crisis point yet? Here's what you need to consider:
1. Why oil is crashing: Simply put, there's too much global oil supply and not enough demand. OPEC, led by Saudi Arabia, is digging in for the long haul, keeping up production as prices fall in an attempt to kill off the American shale boom. Add a ho-hum global economy into the mix, and the result can be dangerous.
"There's oversupply, there was over speculation, and now it becomes a vicious cycle down and no one is able stop it," said Michael Block, Chief Strategist, Rhino Trading Partners.

2. Why the stock market is reacting: As oil continues to plunge, anxiety is mounting that the U.S. energy renaissance, and the jobs it's created, could be under threat. Smaller firms with heavy debt loads are particularly vulnerable, but even big oil has announced it's scaling back on its capital expenditures.
Additionally, low gas prices could have an adverse effect on Europe's fragile economy, asserted Paul Christoper, chief International investment strategist at Wells Fargo Advisors. He noted that that continent's feeble inflation levels could be edged into deflation if consumer prices decline. That would be bad news for everyone.