://finance.yahoo.com/news/opecs-badri-says-oil-price-080841109.html
This article mainly talks about how the recent drop in crude oil is affecting OPEC as well as the rest of the world. One of the main person who was referenced to in this article is Abdullah al-Badri the Secretary General of OPEC. Speaking at a conference in Dubai, Abdullah al-Badri defended November's decision by the Organization of the Petroleum Exporting Countries not to cut its output target of 30 million barrels per day (bpd) in the face of a drop in crude prices to multi-year lows. The price of a barrel as nearly dropped 50% sense October. From the article it was clear that their are multiple reasons for this extreme drop. One of them is opec intended to either undermine the economics of U.S. shale oil production or weaken rival powers closer to home such as Iran and Russia. The other point brought up was only a small increase in supply had lead to a sharp drop in prices, speculation must have had a major impact in deciding these prices.
As you mentioned, there are several factors associated with the recent drop in oil prices. But whatever the reasons, it is clear that the drop in oil prices has had a positive impact on the economy in the United States. Hopefully prices will remain low in the United States for a while longer so that the positive impact can be built upon, allowing our economy to further improve.
ReplyDeleteI'm not so sure this is great for the US economy. While it helps with some of the costs of production in the US, it is slowly strangling the US natural gas industry. OPEC can produce a drum of oil at a little over half of the cost that a fracking company can. That industry is crucial to many Appalachian communities.
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