Everyone thought the biggest economic news of 2014 was going to fall somewhere between the end of quantitative easing, some rumblings from the European Union or whatever Putin’s next bold move would be.

But then oil prices started falling in July, right around the end of quantitative easing, and continued to do so into January of 2015. Investors suddenly seemed torn between the oil industry’s massive decline in profits and the perks of an indirect $200 billion stimulus package for main street consumers .

No one can predict with certainty whether oil will continue rising or falling; however, we can reasonably expect some sectors of the economy will improve if oil prices rise and other sectors to improve if oil prices decline.

We’ll explore investing strategies designed for both bears and bulls on oil’s price. But first, what’s going on with oil?

What’s Going on with Oil

A number of conspiring factors created a “perfect storm ” for oil’s decline: OPEC couldn’t agree on production levels moving forward, so the shale boom coupled with dampened international growth appear to have flooded the market with black gold.

In the words of Michael Hiley. head of energy OTC at LPS Partners Inc. in New York, “it’s a classic case of supply overwhelming demand.”

For a majority of Americans who don’t follow market news or aren’t employed in the energy sector, the biggest difference they’ll see is lower prices at gas stations around the country. With consumers spending less money on gas, chances are they’ll find other places to spend it.

Likewise, companies that rely heavily on planes, trains and automobiles have been able to cut their fuel costs dramatically and reap bigger profits thanks to cheaper oil.

However, the oil industry has a massive stake in the market. The West’s three biggest oil companies — Exxon Mobil Corp. (XOM ), Royal Dutch Shell PLC (RDS-A ) and Chevron Corp. (CVX ) — earned roughly $18.9 billion in Q3 2014 alone .

So when a sector that massive sees its revenue cut by over 50%, people take notice. Workers start losing their jobs. especially those who make their livelihood off of oil, and white collar folks who run the operations realize a new wave of energy sector mergers and acquisitions is a very real possibility.

Where to Invest if You’re Bullish on Oil

Many investors think this massive dip in oil’s price is the perfect opportunity to get in on a historically lucrative industry at a bargain. If you think oil prices will rebound, here’s where you might want to have your money:

United States Oil Fund LP ETF (USO )

In a nutshell, USO is the easiest and most direct way to invest in oil. This ETF consists of futures contracts for crude oil, gasoline, heating oil, natural gas and similar petroleum-based fuels.

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It’s about as close as you can get to having your money move directly with the price of oil. If oil rises, so does your money.

The oil industry

Buying shares from the producers of oil and oil-related products will pay off if oil rises. Naturally if companies in the oil sector see their profits return to pre-summer 2014 levels, you’ll see lots of green in your portfolio as well.

Be on the lookout for mergers and acquisitions, too. Companies that rely heavily on more expensive offshore drilling and shale-oriented endeavors that took on a lot of debt to get started are both hurting the most right now.

Some analysts believe 2015 could be dynamic year for oil M&As. so try putting your money in the big players who have the resources to be on the good end of those deals.

Suggestions: Exxon Mobil Corp. (XOM ), Royal Dutch Shell PLC (RDS-A ) and Chevron Corp. (CVX ), PetroChina Co. Ltd. ADS (PTR ), Total S.A. ADS (TOT )

Alternative energies

It might seem counter-intuitive, but alternative energy companies such as solar, water, wind and possibly even nuclear could see their values increase if oil climbs.

Why? Higher oil prices mean anyone and anything that relies on oil to make money will have to pay more to conduct business. The higher oil goes, the more likely businesses will look to alternative energy technologies to cut costs. (Remember how appealing electric cars looked when gas was upwards of $4 a gallon?)

Suggestions: Tesla Motors Inc. (TSLA ), TerraForm Power Inc. (TERP ), SolarCity Corporation (SCTY ), Cameco Corp. (CCJ ), NextEra Energy (NEE )

For more ideas, see 4 Ways To Invest In Oil .

Where to Invest if You’re Bearish on Oil

The last time two times oil was this cheap was during the Great Recession and the middle of 2004. However, oil could continue falling, with some saying it could reach $20 a barrel or lower .

We’re not sure whether the U.S. or OPEC will blink first when it comes to cutting oil production, but oil could continue falling over the short-term.

If you want to make money off of oil’s fall, the following sectors may be sound investment decisions:

Inverse oil funds

What is an inverse oil fund, you ask? Generally these are investments tailored to move contrary to the price of crude oil and oil products. When oil falls, these investments move up.

However, keep in mind that funds like these tend to rely heavily on shorts and are prone to extreme volatility.

Suggestions: VelocityShares 3x Inverse Crude ETN (DWTI ), PowerShares Deutsche Bank Crude Oil Double Short ETN (DTO ), ProShares UltraShort Bloomberg Crude Oil (SCO )

Airlines

One of the airline industry’s biggest expenses is fuel, so you’d think cheap oil would help you save money on air travel. But so far they’ve stayed around the same price they were during those $100-per-barrel days.

Naturally this puts airline companies in a much healthier financial position, poised for a future that looks bright in the short-term. If you’ve got money in the airline industry, expect to reap money if oil continues falling.

Suggestions: Delta Air Lines (DAL ), American Airlines Group Inc. (AAL ), Southwest Airlines Co. (LUV ), Raynair Holdings (RYAAY ), United Continental Holdings (UAL )

Leisure Activities

Consumers may see lower gas prices as an opportunity to spend more money elsewhere.

What they used to spend at the pump can now go towards activities such as dinners at restaurants, financing a new car, entertainment or maybe even vacation stays at hotels. The companies themselves will also save on lower transportation costs.

Suggestions: Nike Inc. (NKE ), L Brands (LB ), Wal-Mart Stores Inc. (WMT ), Darden Restaurants Inc. (DRI ), Hospitality Properties Trust (HPT )

(For more, see: 3 Sectors ETFs That Should Thrive On Low Oil Prices ).

The Bottom Line

No one is sure what oil will do next, but we have a pretty good idea who will win and who will lose depending on its price movements.

Events that could desaturate the market of oil could help its price rise. For example, ISIS could disrupt major pipelines and operations in the Middle East; OPEC or the U.S. could agree to cut production; or demand could suddenly pick up in Asia.

If demand for oil falls or if some nation suddenly decides to start increasing their production, we could see oil’s price drop even lower.

Keep in mind these strategies are intended for the short-term; a long-term portfolio based on the price of oil is a risky investment decision.

Steven Richmond worked as a government and business journalist before becoming Editor-in-Chief of BadCredit.org , a leading website for consumer credit and debt news and advice, and CardRates.com , a comprehensive guide to credit card rates, deals and information.