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So, are the current historically low crude oil and gasoline prices good or bad?
WTI is down below $35 per barrel for the first time since the bottom of the financial crisis in 2009. This trend was initially started by a combination of increased crude oil from US fracking activities on the supply side and lower quantities of crude oil demanded internationally as a result of a weak worldwide economy.
Over the last year or so, the downward trend on crude oil and gasoline prices has accelerated due largely to Saudi Arabia's strategy to flood the market with cheap crude in order to undermine the economics of the US fracking industry. If the Saudi's are successful, oil supplies will eventually be reduced again when their control over prices has been sufficiently restored. At that point we would, if they were to have their way, be at their mercy with regards to crude oil prices, yet again.
The energy markets are tanking and are at levels that have not been seen since 'The Recession' of 2009. Opinions are divided on the effects of the fall. Some say it is good for consumers, whereas, others say it is bad for the global economy. This article will analyze the overall effects of low crude oil prices on the industry, the major oil-producing nations, consumers and the overall global economy.
Of course we all like paying less at the pump. I filled my car up with premium (93 Octane) at the Costco the other day for $1.95 per gallon. Wow. If you had asked me a year ago, I would have been tempted to say we might never see prices that low on gasoline again. But here they are.
I like paying less for gasoline, don't you?
Then again, hundreds of thousands of people have lost their jobs already because of this international market manipulation and price fixing scheme. Many countries that have built their budgets around oil revenues, especially in the notoriously unstable Middle East, and also Russia, Venezuela, etc. are dependent on higher crude oil prices to make ends meet. The human costs of this are enormous, and it could very well lead to a number of wars, perhaps even a major war in the Middle East. The possibility for international instability and violence as a result of these historically low crude oil prices are really quite substantial.
Also, I am not an AGW alarmism nut, but many of the people who are, including our current President Barack Obama, have made it clear that their preferred way to wean people off of fossil fuels is to jack up the prices way high, preferably through the addition of enormously high oil and gasoline (paid at the pump) taxes. So, on top of everything else, the current low prices are currently serving to promote more fossil fuel usage and to undermine the economic argument for using "renewable" energy, such as solar, wind, etc.
With all that in mind, what do you think? Are low oil and gasoline prices good or bad?
Last edited by Spartacus713; 12-14-2015 at 07:34 AM..
On the whole, it's good for prices to be low. My particular industry and company (Engineering large industrial projects) are hard hit and it's hammering the industry really hard but that doesn't make the overall effect negative.
I guess the one thing that might be a net negative is the low prices will encourage higher consumption resulting in more Global Warming.
In general, it's good. Transportation costs are low, and that has a big resonating effect across the economy in many areas outside of trucking/rail/airlines.
Good or bad, low oil prices will not remain. The price will come back. It has to. The price isn't high enough to give incentives to a lot of drilling of new wells. Therefore the oil supply will decline due to lack of drilling. Old, low productivity wells will stop producing, then there will be a shortage of supply and the price will rise again. It happens over and over again, like clockwork.
Good or bad, low oil prices will not remain. The price will come back. It has to. The price isn't high enough to give incentives to a lot of drilling of new wells. Therefore the oil supply will decline due to lack of drilling. Old, low productivity wells will stop producing, then there will be a shortage of supply and the price will rise again. It happens over and over again, like clockwork.
The Saudis and OPEC have amped up their production to drive fracking into bankruptcy.
I say stop all oil imports, rely on North American oil that keeps the wells pumping and the jobs safe and tell the Saudis to go eff a camel.
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