Global Economic Intersection
Advertisement
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

The Real Winners and Losers from the Falling Oil Price

admin by admin
January 11, 2015
in Uncategorized
0
0
SHARES
5
VIEWS
Share on FacebookShare on Twitter

by Richard Heaney, The Conversation

While this year’s relative stability in crude oil prices appears to have lulled us into a false sense of security, the dramatic fall over the last few weeks reminds us just how volatile these prices can be.

The chart below highlights the movements in the USD price of Brent crude over the period from January 1980 to mid-December this year. The rapid growth in crude oil prices over the period from 2007 to 2008 gave us some insight as to just how quickly crude oil prices could rise. The fall in late 2008 associated with the global financial crisis and the more recent plunge in crude prices show us how quickly crude oil prices can fall. The price today is a little over US$60 per barrel.

Brent crude oil price (FOB USD price per barrel)


Datastream

The impact on Australian petrol consumers

Who gains and who loses with these dramatic shifts in price? It is hoped these movements will eventually be reflected at the petrol bowser. The problem for consumers is that it takes time for stocks of crude purchased at higher prices to work their way through the system to the petrol bowser. Refineries hold stocks of crude oil acquired at the previously high prices and stocks of diesel and petrol refined from this higher priced crude also take time to pass into the market.

Nevertheless, we are seeing some benefits from this drop in crude oil prices. For example, the chart below shows the Australian average retail unleaded petrol price (ULP) has decreased from a little over 146 cents per litre at the end of September to around 132 cents per litre at present. This will probably continue as crude prices have almost halved over the last six months and these price falls will eventually affect petrol prices.

National Average retail ULP price


Average Weekly Prices for the 12 Weeks to Sunday, 14 December 2014 Australian Institute of Petroleum

The impact on producers

The main players in the crude oil market include the OPEC members (Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Emirates, Venezuela), US, Russia, China. The US, Saudi Arabia and Russia are the biggest producers by a considerable margin, accounting for almost half of world crude oil production in 2014.

Crude oil producers earn lower profits from the sale of crude oil and if the crude oil price falls then countries like Russia that are particularly dependent on revenues from sale of crude oil will suffer. It has been suggested the recent tumble in the Russian rouble is due solely to the fall in revenues from sale of crude oil. Apparently, Russia requires a price around US$100 per barrel for oil production to make sense.

Some commentators (http://www.wsj.com/articles/mitsui-ceo-u-s-saudis-pushing-oil-lower-to-hurt-islamic-state-russia-1418876600) have suggested US and Saudi production has been increased to apply further economic pressure on Russia. The chart below provides some insight into this question. It plots the Energy Information Administration international crude oil production data for the period from 2010 to August 2014.

There is clear evidence of increasing US production with the US monthly production increasing from 9,377 thousand barrels per day in January 2010 to 14,162 thousand barrels per day in August 2014, but this is not a reaction to recent events.

The growth in US production appears to be part of a continuing trend over the last 3-4 years, rather than a sudden reaction to the destruction of MH17 over Eastern Ukraine in September 2014 or the annexation of Crimea, in March 2014.

Saudi Arabian production has been quite volatile over the last 3-4 years though it has not grown to the same extent as the US production. Indeed, it appears quite flat over the last 12 months with the daily production rate actually decreasing between January 2014 and August 2014.

Russian production has been much more stable than either US or Saudi production.

Monthly Crude Oil Production, US, Saudi Arabia and Russia


Energy Information Administration

There is no doubt that US crude oil production has increased since 2010 and that this increase accounts for more than half of the increase in world production over the period. But it is difficult to see a link between these general trends in crude oil production and recent activity in the Ukraine.

It takes time to change crude oil production levels and it is very costly to do so. It seems unlikely that production has led to the recent fall in crude oil prices though it is true this argument is based on monthly production rates up to August this year. It is possible that US crude oil production has been further increased in the months following August, though the most recent data for September suggest US crude oil production was down a little if anything.

Ultimately, crude oil production is increasing and much of this increase is coming from the US. The impact on the other crude oil producers in the world will vary from little impact in the case of Saudi Arabia though to considerable economic cost for countries like Russia.

The impact on crude oil purchasers

A cut in the crude oil price of almost 50% just as the Europe and US winter approaches has got to be good news for the northern hemisphere. The cost of energy and heating generally rises during this period and many will have full Christmas stockings with this particularly timely present.

More importantly, the less developed nations of the world depend on oil and coal for their energy needs and this drop in the cost of energy will have a dramatic impact on the living conditions in these countries as costs of electricity and transport fall. This will free up cash for the other necessities of life.

The crude oil producers have seen good times for more than three years with crude oil prices exceeding US$80 per barrel. It looks like the pendulum is swinging back towards a time of lower crude oil prices and consumers can again acquire energy at more reasonable rates. While this is bad news for the producers it will have a dramatic impact on the world economy which has slowed considerably in recent years.

This article was originally published on The Conversation. Read the original article.

Previous Post

Documentary of the Week: 2015 Sustainability Panel Discussion

Next Post

French Views of Muslims Are Overwhelmingly Positive

Related Posts

Web3 Company To Run Super Bowl Ad For NFT Game As Crypto Is Ignored
Business

Web3 Company To Run Super Bowl Ad For NFT Game As Crypto Is Ignored

by John Wanguba
February 8, 2023
Google Introduces ChatGPT Rival Bard, AI Search Plans Accelerate In Battle With Microsoft
Business

Google Introduces ChatGPT Rival Bard, AI Search Plans Accelerate In Battle With Microsoft

by John Wanguba
February 8, 2023
BP Earns Record Profit In 2022, Slows Shift From Oil
Business

BP Earns Record Profit In 2022, Slows Shift From Oil

by John Wanguba
February 8, 2023
How To Mine Bitcoin At Home
Econ Intersect News

How To Mine Bitcoin At Home

by John Wanguba
February 7, 2023
Adani's Market Losses Exceeded $100B As Crisis Shockwaves Extended
Business

Adani’s Market Losses Exceeded $100B As Crisis Shockwaves Extended

by John Wanguba
February 7, 2023
Next Post

French Views of Muslims Are Overwhelmingly Positive

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins banking banks Binance Bitcoin Bitcoin adoption Bitcoin market Bitcoin mining blockchain BTC business China crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum Europe finance FTX inflation investment market analysis markets Metaverse mining NFT nonfungible tokens oil market price analysis recession regulation Russia technology Tesla the UK the US Twitter

Archives

  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • Web3 Company To Run Super Bowl Ad For NFT Game As Crypto Is Ignored
  • Google Introduces ChatGPT Rival Bard, AI Search Plans Accelerate In Battle With Microsoft
  • BP Earns Record Profit In 2022, Slows Shift From Oil

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

en English
ar Arabicbg Bulgarianda Danishnl Dutchen Englishfi Finnishfr Frenchde Germanel Greekit Italianja Japaneselv Latvianno Norwegianpl Polishpt Portuguesero Romanianes Spanishsv Swedish