Falling Oil Prices

Posted by on December 23, 2014

As most people now know, oil prices have recently fallen to the lowest price since 2009. This change has many effects on the global economy, and while most people would assume they would be good changes, the truth is that it is a largely mixed bag of positives and negatives.

Falling oil prices has a largely positive impact on consumers of oil around the world, but as the oil market is such a large part of the global marketplace, the detriment it causes to producers of oil can have a negative effect on everyone.

If you take the USA as one example and Russia as another; the USA has re-emerged as a global producer of oil, but what they’ve been contributing to the market place has above average costs when it comes to the extraction, which only made sense to extract due to the high oil price; Russia is the place which is perhaps the hardest hit by the fall in oil price, as one of the biggest global contributors of oil, and it playing such as massive role in the country’s economy, balancing the nation’s books with such a massive decrease in revenue could be disastrous.

The damage such a decrease in oil price could cause to these two nations and countries in OPEC could end up hurting everybody, so although having low costs at the pump is good for consumers, the end result could be bad for them.

Posted in: Economic News