7 things you should know about the falling price of oil
Posted on 04-11-2014 at 19:07 by sir_smokalot – 25 Comments”
The world in the last few weeks in the wake of an oil price that is significantly under pressure, and for a while back in an amount of 2 decimal digits per barrel. This has all sorts of causes and consequences: an overview.
The falling price of oil is mainly due to an expansion of the supply, although the question is whether we are already peak oil-like proportions have achieved. But this is not (only) because of the OPEC (accounting for 40-45% of the prooductie) the crane is further opened. Anyway, they have the prices fall, and the following things are all connected.
- Frackende Americans arrange for more supply
George Bush called a decade ago that the U.S. is less dependent on needed to be of foreign oil, and will fracking (cracking soil with chemicals) with pleasure. That the groundwater may permanently contaminate the chemicals, that is a side issue. In any case, the range is greater, causing the price drops.
Saudi Arabia would, according to the rumors with dismay, and his offering was expanded to frackers, the cheese of the bread to eat. The cost is around $85 dollars per barrel, while a barrel is currently $83. But even if there is now a moment paused in the USA, then the crack will happily continue as soon as this profitable again.
- The role of speculators is large
Oil is an emotional market, where huge profits can be achieved. According to some experts and investors previously massive oil purchased in the expectation that the price would rise. Not entirely unexpected, because both Libya, Iraq and Nigeria are still superinstabiel. When the expected increase a decline was to have a lot of hedge funds, the losses taken and hefty stocks in the market dumped, what the price further did bags.
- It is lethal for certain regimes
For some countries, it is not income tax, but oil is the main source of income. These countries have over the past few years thanks to rising oil prices and dolllars against the skirting klotsten ever broader budgeted, resulting in a much higher price per barrel than it was previously necessary to balance the budget. Main examples of this are Venezuela, Iran, but also Saudi Arabia, and Russia. These last two parties may, however, still uitzingen by, respectively, huge reserves and a steep fall of the ruble.
- Expensive extraction methods go in the fridge
When there are huge prices for a barrel of oil to be paid pays to research and/or oil to do that which costs more than the traditional oliewinmethoden. We mention, for example, the gain from tar sands, fracking, and extraction in hard-to-reach places, or places with non-ideal climatic conditions (such as the north pole).
- Low oil prices push the inflation
When there is less on the pump (and the associated gas bill) is settled in inflation. At this time, a falling inflation in Europe, where the deflatiespook just wait, anything but desirable.
On the other hand, however, the guiding principle of the IMF that a decrease in the price of oil by $20 is good for a 0.4 percent growth of the world economy. And more economiche activity is killing of deflation, because the consumption aanjaagt.
- More fuel-efficient cars are to blame for lower oil prices
Of course, oil is used for much else than the refining of petrol or diesel, but the 80 million cars each and every year (there are currently a total of 1+ billion around) have a sizable effect on the oil consumption. A current new car is easily 20 to 30% more fuel efficient than a comparable model 10 to 15 years ago. Add to this that the western world according to some analysts, in a state of ‘peak car’ situation, in which the general levels of car ownership does not grow, but even will decrease, and we see that the demand from the auto industry no longer attracts.
- Brandstofsubsidies can be reduced
There are still many countries where the price of fuel artificially low is held by large grants. Although the population hold it is crippling the state finances. In Indonesia but less than a fifth of the total budget on brandstofsubsidies, an unsustainable situation. The newly elected president Widjojo, a man of the people, will falling oil prices with relieved heart watch.
India, which is 14% of its budget one such person on grants, bought recently the subsidy on diesel.
And my situation? What I notice on the pump?
When there is a falling oil price will hear a falling price of fuel, and that is a fact. The only question is how far this still drops. The oil market is not purely a spot market, there are also long-term contracts. In addition, the gas which now fills the waarschijnijk refined from more expensive oil, the price changes are never instant. But in any case, throw you now, for less euro’s you tank full than before.