Black Gold Prices Have Everyone Watching

Black Gold Prices Have Everyone Watching


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In the past sixth months the price of oil has nearly dropped down half of its original price. Car drivers, truck drivers, airliners, and shipping companies have been throwing their arms up in the air shouting in rapturous glee. A barrel of oil use to cost $107 but now it is $58. This price drop has experts so discombobulated.  The experts aren’t even sure if the price drop is a good or a bad thing.

Oil prices have been fluctuating constantly over the years, mostly price high. The group OPEC is composed of 12 of the world’s biggest oil-producing countries decide how much oil the group will sell. OPEC has decided to pump oil out steadily, more oil is being pumped out than the world needs. The global demand for oil is expected to grow next year, but don’t worry the growth isn’t expected to be much.

The United States buys more oil than any other country, then China, Japan, and Western Europe are the next biggest buyers of oil. These countries economies are appearing to weaken. When economies weaken so does the demand for petrol. For consumers the reduced price for gas is good for U.S. families. The reduced price means more money in the consumers pockets to spend elsewhere.

Just in the last week, oil prices have stabilized and begun to rise slowly.  This is interesting because President Obama also just vetoed the American Keystone pipeline project due to environmental concerns.  This upset Republicans and others who want to override the veto and believe it threatens open business relations with one of our closest allies, Canada.

The oil price plunging could possible mean the global economy is struggling to stay afloat. A weak global economy could mean bad news for the U.S. economy. Oil workers may have a worse outlook with the drop in price, the companies may fire thousands of workers. OPEC’s composing countries rely on the sale of oil and those countries economies may be hurt from how low the price of oil is. For example, Venezuela relies heavily on the profit made from oil sales. For every $1 drop in the cost of oil, Venezuela loses $770 million a year. Venezuela could possibly lose $36 billion this year.

I currently cannot drive but if I could, I’d love to be. The gas prices are low and that is good for the people using it. The economics of oil and energy use is very political because it affects all citizens; both the rich and powerful and the ordinary people like us.

Top Oil Producing Countries 1960-2006
Top Oil Producing Countries 1960-2006 (Photo credit: Wikipedia)