Wednesday, December 3, 2014
As oil prices plunge, wide-ranging effects for consumers and the global economy
http://www.washingtonpost.com/business/economy/as-oil-prices-plunge-wide-ranging-effects-for-consumers-and-the-global-economy/2014/12/01/904984b2-7971-11e4-9a27-6fdbc612bff8_story.html DUE 8 DECEMBER 2014...(ONE OF TWO). How much have oil prices declined in the past 7 months? Why have they declined?? What actions did OPEC take?? What are 3 economic advantages of an oil price decline? What are 3 economic disadvantages of an oil price decline? Predict the future economic impact of symbiotic industries as these price declines affect the macro-economy.
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Falling oil prices are costing oil-rich exporters and oil companies hundreds of billions of dollars. The price of oil has declined about 40% since its peak in mid-June and continued to after the Organization of the Petroleum Exporting Countries (OPEC) voted to continue to pump at the same rate. It expanded U.S. domestic energy supplies. Americans are saving $630 million everyday compared to the prices paid in June. It could help the economy because the money not spent on gas could be spent on groceries, clothing and other goods. Big American companies are better off because every penny the price of jet fuel declines could mean savings of $40 million for delta Air Lines.
ReplyDeleteThough the falling oil prices lower inflation, the Federal Reserve tend to view it as a fleeting effect that would not alter its underlying judgments about policy. The annual revenue of OPEC members would decline by $590 billion. That money will stay within the borders of the world’s biggest oil importers. The 40% drop in Brent-grade crude oil over the past five months will reduce annual revenue to oil producers by $1.5 trillion. The losers include Russia, Iran, Venezuela and even the United States but mostly in the oil patch. The prospect of low oil prices over an extended period of time has grown so much after OPEC decided to maintain output instead of paring back to bring up prices. I believe these prices will benefit our economy and the gains will outweigh the losses. Lately, high oil prices has not done anything to help our economy but low prices can change it for the better.
Oil prices have declined to nearly 40% since its peak in June and began to continue steadily decrease after the decision of OPEC, or the Organization of the Petroleum Exporting Countries, voted to continue pumping oil at the constant rate. Three economic advantages of the oil decline are: economic saving from spending money on oil continuously; economic benefits for other businesses which could receive revenue; and airlines will be saving money for jet fuel. The advantages that benefit the economy do not only apply to companies and businesses but also to individuals too.
ReplyDeleteThree economic disadvantages from the price decline for oil are: the annual revenue for OPEC will decline by $590 billion; the drop in Brent-grade crude oil will reduce the annual revenue for oil producers by $1.5 trillion; and large countries such as Russia, Venezuela, and the US will be losing money for the drop in price. Industries will begin to lower production if they have an excess amount of oil and consumers will still be willing to buy the good if it was a necessity.
Within the past several months oil prices have decreased by forty percent. This decline was caused by a decision made by Opec to continue to pump oil at the same rate through these past seven months, which created a trend by expanding US domestic energy supplies. I think that this is fine, Opec shouldn’t do anything. The money that people are saving from these decreasing prices is going back into the economy, spent on other things such as food and clothing.
ReplyDeleteAs I said before one benefit to these lowering prices is that people now have more money to spend on other necessities such as food and clothing. Consumer spending will increase and more money will go into the economy. Also industries that rely heavily on oil, such as airlines, will save more money on oil and can use the money on other things to expand or better their business.
However, if people are not spending as much on oil anymore then that means Opec isn’t making as much money as before their revenue and profits are decreasing. This drop in oil prices will also have an effect on oil producers worldwide. Russia is entering into a recession due to its reliance on tax revenues on oil. Iran’s economy and government budget relies heavily on oil sales; this could be another push for the regime to reach a diplomatic accord on its nuclear program.
The low cost of oil by Opec is causing the profits of other oil producers worldwide to decrease. These oil companies will follow Opec’s example and begin to lower the prices of their oil as well. Their profits will go back up, but their profits won’t be as high as before, when Opec’s oil prices weren’t decreasing.
Often id the online video games i play other players, including myself, suicide ourselves in order to kill the other best player in the opposite team. It is a formidable strategy, but not so much if it only lowered the enemy by 30% and ends up killing some of your allies. However, when this happens to other players they look pretty stupid from my point of view, and the extra time that their stupid suicide move awarded me i can use to summon a huge bomb to eliminate the opposing threat. This is what is going on with the falling prices. OPEC, although it is loosing money and some of its members are getting badly hurt economically speaking, continues to let prices drop in order to take US shale oil out of the market. Perfect idea, except for that the US shale oil companies are probably only gonna be slowed down by thirty percent and this practice endangers countries like Russia, Iran, and Venezuela. But for the US as a whole it is a very good thing. These lower oil prices serve as an incentive for consumers to consume other things, and it so happens that it is the holiday seasons, so there is a whole lot to spend on. But you see, this can be more than a slight ease in the pocket for the US, if we seize this opportunity right now and increase spending in alternative domestic energy sources we might end up triumphant for a long time. If this slight reduction to the price of oil will save us so much money we can spend on other things, and makes an economic growth in the US, imagine what a major reduction in the consumption of oil will do? What if we could not only decrease unemployment (as new firms that specialize in clean energy would need to hire more people), but also increase US growth? It can be done,and it is almost time. If we take care of this energy issue, we can turn to more important things like Ferguson Missouri or the ISIS and Ebola threats. But we can't deny in dealing with the energy issue first, because although it is not more important than those other issues, there is no better time to deal with it than when we have the upper hand. Lets be once again the world leader country we were once, and stop being the country that has to buy and borrow everything. Lets become the country that produces and sells. Lets not settle with making money, lets make, no continue, this American Legacy for decades and centuries to come.
ReplyDeleteOver the past couple of months, oil prices have been declining to about 40% since its peak in June and has since been steadily decreasing since OPEC voted to continue pumping oil at the constant rate. Some economic advantages of the oil decline are saving money from always spending money on drilling oil, benefiting other businesses which could receive revenue, and now people can spend money on other necessities rather than on oil. The advantages that benefit the economy affect the companies as well as individuals.
ReplyDeleteSome economic disadvantages from the price decline include the loss of $590 billion of annual revenue for OPEC. the reduced revenue of Brent-grade crude oi, and other major companies, like Russia and the US will lose money from the drop in oil prices. Industries will begin to lower production if they have a surplus of oil, however consumers will still be willing to buy the good if it was a necessity.
The low cost of oil is causing the profits of other oil producers worldwide to decrease. These oil companies will follow OPECs example and also lower the prices of their oil. Their profits will then go back up, but not as high as before.
In the Previous 7 months only prices have declined roughly 40%, and they continue to fall because OPEC has continued to pump oil at the same rate. they have decided to do nothing about the falling prices. like discussed in class this is obviously a tactic used to push out the smaller oil firms by putting them at a loss until they shut down. when that happens oil prices will surely rise again. Some benefits of the lower oil prices are americans are saving about 630million dollars a day. allotting americans to spend there money on other staples. Big american companies are saving 40million for delta air lines. the drop in prices across the bored will not only save the average man and big business money but will help stimulate the economy as well. There are also negatives of the falling oil prices. Russia economy is dropping very rapidly and like the 40% drop in oil prices Russia currency has dropped 40% in value. oil prices have done more than hurt the economy in western sanctions. iran also has a government budget relying heavily on oil sales, low prices could intensify the effect of sanctions. Venezuela in grouped in with these lousing countries from dropping oil prices.
ReplyDeleteThere also losing in the USA as well Services giant Halliburton has lost 44% value since july 23.
The lost cost of oil is obviously causing the oil companies to louse profits. If opec can withstand the loss in revenue longer than the other companies than the other companies the other companies might shut down or get bought out by opec. when that happens there will be less firms producing oil and demand will increase. if demand increases than opec will the rise prices once again.
Oil prices have declined nearly 40% in the past 7 months. They have declined so much in this time because some much oil is being produced. The supply of oil has increased while demand has decreased, causing lower prices. OPEC did not take any actions in order to stop falling prices of oil. In a recent meeting OPEC decided not to lower oil production in order to raise prices, instead keeping oil production the same.
ReplyDeleteThree economic advantages of an oil price decline are increased consumer spending in other industries, savings for airlines, and lower inflation. Lower oil prices mean consumers are not spending as much on gasoline so they can use their money elsewhere such as to buy food, clothing, and other products. Airlines use large amounts of fuel to power their jets so lower prices mean they are saving millions on fuel which can in turn help lower the price of airline tickets. Lower gas prices also helps lower inflation.
Three economic disadvantages of declining oil prices are decreased revenue for OPEC members, increased inflation in Russia, and value losses for American oil companies. Declining oil prices means declining profits for OPEC members who rely heavily on the sale of oil. Russia is another country that relies heavily on oil, especially the tax revenues they receive from it, so lower oil prices means less money and cause inflation of the Russian currency. U.S. oil companies are also seeing negative consequences due to the lower oil prices, Halliburton, an oil service giant, has lost 44 percent of its value since July 23.
The future economic impact of this decline in oil prices will be widespread. Russia is predicted to be headed into a recession next year, while Venezuela is already in an economic crisis which has been worsened by these oil prices. If oil prices continue to tumble, Venezuela could be faced with a dire situation. I think that soon oil production will need to be lowered in order to not completely run economies into the ground. Though declining oil prices may be beneficial to the U.S. they are too damaging to many other countries for them to continue to fall.
Oil prices have decreased about 40% since its peak during June. The reason behind this steady decline is because the OPEC (Organization of the Petroleum Exporting Countries) voted to continue to pump oil at the same constant rate. With the decline in oil prices some economic advantages would include the U.S. saving money on less oil drilling, increased consumer spending on other businesses, and an overall cheaper airline tickets, which can, in turn, lead to higher demand. Three disadvantages of decreased oil prices would include the loss of $590 billion of OPEC revenue. Also due to the 40% price drop in the international Brent grade crude oil will reduce the annual revenue to oil producers worldwide by about $1.5 trillion. Finally, American oil companies will generate large amounts of loss. Companies such as Halliburton have lost 44% of its overall value since July 23. The low prices of oil set by OPEC are making oil companies from around the world decrease. If oil companies are willing to follow OPEC’s idea and lower their oil prices, than in the future these companies will see an increase in profits. The only drawback to this is that the companies will not see their profits as high as they were before.
ReplyDeleteRecently oil prices have been declining by about 40% since its peak in June. The steady decrease has continued since OPEC voted to continue pumping oil at the constant rate. Due to OPEC's decision there are some economic advantages. Such advantages include saving money by not spending more money on drilling oil, businesses might experience increased revenue, and consumers can spend money on other goods rather than on oil. OPEC's decision also has economic disadvantages. These disadvantages include the loss of $590 billion of annual revenue for OPEC, the reduced revenue of Brent-grade crude oil, and other major suppliers, like Russia and the US, will lose money from the drop in oil prices due to oversupply. Industries will want to cut down on their use of oil due to an oversupply of it.The low cost of oil is causing the profits of other oil producers worldwide to decrease. These oil companies will follow OPEC's example and also lower the prices of their oil.
ReplyDeleteOil Prices have declined about 40% since its peak in mid-June and continued to after the Organization of the Petroleum Exporting Countries (OPEC) voted to continue to pump at the same rate. I think that this is fine, Opec shouldn’t do anything. Decreasing their supply or reducing their production wouldn’t benefit them. The money that people are saving from these decreasing prices is going back into the economy.
ReplyDeleteThree economic advantages of the oil decline are: economic saving from spending money on oil continuously; economic benefits for other businesses which could receive revenue; and airlines will be saving money for jet fuel. Money can be spent in other markets like food and clothing.
Three disadvantages are the oversupply of oil, a decrease of price of oil/gas/engine fuel, and a large decrease of production for the industry’s companies.
The future economic impact of this decline in oil prices will be widespread. Russia is predicted to be headed into a recession next year, while Venezuela is already in an economic crisis which has been worsened by these oil prices. The low cost of oil by Opec is causing the profits of other oil producers worldwide to decrease. These oil companies will follow Opec’s example and begin to lower the prices of their oil as well. The dependency upon oil will further diminish. People would find substitutes to fossil fuels like other European countries. The Oil industry won’t be something like it once was.
Oil prices have declined by 40% in the past 5 months. OPEC has made it so that oil is pumped at the same rate as before – a weak global economy but an expansion in U.S. domestic energy supplies – after disagreements on oil production.
ReplyDeleteThree advantages of oil price decline are that gasoline is at a low that may be reduced by 20 cents, which is a benefit to the motorists ($630 million benefit); that this saved money will flow back into the economy, helping low-income families that now spend less on gasoline; and big American companies, like airplane companies, which have to spend less on fuel ($40 million saved for Delta Airlines).
However, with these savings in certain areas come deficits in others. Initially, OPEC suffers, with a loss in revenue reaching $590 billion, money retained by the larger importers (China and the U.S) but not taken by the smaller ones. The 40% drop will also lower annual revenue worldwide by $1.5 trillion, taking biggest effect in Russia, which has saw its GDP lower as a result. Iran, another disadvantage, has felt the problems of lower oil prices because of their heavy reliance on oil sales and their inability to produce as much as the U.S, who has flooded the market.
There is a symbiotic relationship within the world industries – but, in this case, not a good one. Rather, the major oil industries will continue their reign as parasites to the host OPEC, while the other industries suffer. The U.S overproduced, benefiting itself while many others, like Russia, have lost their footing and hurt their budgetary means. The world-macroeconomy will see a definite decline in revenue, but for individual countries, there will be fluctuations (Russia falls, U.S rises, and other countries see themselves either growing or falling quickly).
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ReplyDeleteIn the past seven months, oil prices has declined by 40% since its peak mid-June and continues to plummet from just last week. The decreasing oil price is due to a huge global oversupply of oil. The U.S happens to produce a lot of the shale oil used in the world. OPEC decided to keep the prices at their last meeting, despite the economic decline of many countries.
ReplyDeleteThree economic advantages are increased consumer spending, lower inflation, and benefits for U.S companies.
Three economic disadvantages are small importers worse off, decreased annual revenue by 1.5 trillion, and a decrease in value.
As for the economy in the future, I don't see much of a positive effect for the long-term. The benefits for the U.S will be a short run, because now we see 44% decrease in value since July. The U.S will soon take a toll with every other country and end up hurting themselves while these countries suffer as well.
Oil prices have declined about 40 percent in the past seven months and it plunged last week after OPEC decided to keep pumping oil at the same rate. The price of oil has been dropping so dramatically because the supply of it has increased and the demand has not been able to keep up the large amounts of oil that is available in the world market which is causing an unwanted surplus for producers.
ReplyDeleteAn economic advantage of an oil price decline is that consumers are saving large amounts of money which can be used food, clothing and other commodities. Americans are saving $630 million daily on gasoline compared to what they paid in early June. Another economic advantage of low oil prices is that large American companies are thriving. For example, Delta Airlines saves millions of dollars for every penny the price of jet fuel drops. The last advantage is that falling lower prices lower inflation.
An economic disadvantage of an oil price decline is that the annual revenue of OPEC members can fall by $590 billion. This money instead will be in the hands of large importers of oil such as China and the United States. The annual revenue to oil producers worldwide over the past five months has been reduced by $1.3 trillion. Also, major producers of oil such as Russia are experiencing economic turmoil as the price of oil falls and are expected to be in a recession by 2015. Lastly, small-scale oil producers are going out of business with the oil price decline because they cannot compete with companies like OPEC.
My prediction is that as the oil prices continue to decline OPEC will schedule another meeting and cut the production of oil drastically causing the end to this “shift in wealth”. However, by the time this happens the damage would have already been done. Major oil producing countries such as Russia and Iran will experience drawbacks in their economy and the worst case scenario is that they will enter into a recession. I do not think that the price of oil will continue to decline much longer and once it stabilizes it will skyrocket to the price it was at in early June.
Over the past 7 months, oil prices have declined about 40%. The reason why is because OPEC has decided to continue pumping oil, resulting is surplus, which lowers the market price. There are three advantages to this, in that consumers save money from oil prices, businesses that rely on oil having less cost, and airlines being somewhat cheaper, as jet fuel will now be cheaper. So not only do businesses benefit, individuals benefit as well. Three disadvantages are that OPEC annual revenue will decrease by 590 billion dollars. Brent-crude oil producers will reduce annual revenue for its producers by 1.5 trillion. also large countries like Russia and Venezuela will lose out from this, and their revenue will also drop. I feel that while the oil companies might be losing out, it will benefit the economy as a whole. companies and consumers who rely on oil will have more to spend on other things, so other areas of the economy not related to oil will also benefit from the drop in oil prices.
ReplyDeleteWith a reduction in worldwide revenue of $1.5 trillion, oil prices have seen a decline in price by 40% in just the past 5 months. This decline has reduced the world economy but certainly not individual countries (OPEC suffered a great loss, but not necessarily the U.S and other major importers). They will probably continue to decline because of the disagreement by OPEC to combat this issue, largely in part by the overproduction of oil.
ReplyDeleteThe advantages include, obviously, the consumer benefit of having low oil prices. Fuel prices estimates saying it will go down by 20 cents, which have two benefits: low prices for motorists in the form of $630 million in saving and low-income families focusing on staples rather than the need for gasoline (a redistribution of their household income). Another advantage is for companies like Delta Blue and American Airlines that have to spend less money on fuel than before, which saved them about $40 million.
Disadvantages include the loss of $590 billion by OPEC. Also, there has been an increasing difference between major and non-major oil importers. The U.S, with flooding the market with overproduction, has cost other issues by lowering the revenue they would receive. In effect, this is the heart of monopolistic competition. As previously stated, the total net revenue will drop by a staggering $1.5 trillion, while many countries like Saudi Arabia are scared to lose out and will not withhold their oil output. The Russian and Iranian governments have also seen a depreciating GDP value and budgetary conflicts. These have hindered economies in places already troubled in domestic trades, as Venezuela.
The symbiotic relationship is that of host and parasite: major industries take over the others as they flood the market and gain as a monopoly. This has caused OPEC to decline and the world’s revenue to decline. It will be the decline of less fortunate countries, though – at the moment – it has brought the U.S prosperity for the consumer in the form of lower prices.
In the past 7 months oil prices have declined by about 40% and they're still dropping. They have been dropping for two reasons, a supply glut, and a weaker global demand. The supply glut is driven by increased U.S. shale production. Shale production has driven U.S. production of oil to 4 million barrels a day. The decrease in global demand of oil is driven by weak economic prospects in the EU and Japan. OPEC decided not to take any actions in the face of these falling oil prices. In fact, they've decided to let the market decide on the best course of action and so they did not schedule their next meeting until next June.
ReplyDeleteOne economic advantage to falling oil prices is the needed boost that they will give to both the EU and Japan. This cut on oil spending will make it easier to dig themselves out of a recession. For example, it will be easier for them to build infrastructure because the energy required for them to do so will be cheaper. Another economic benefit will be for low income households. These poorer households will save money on gas and transportation costs. As a result, they will have more money left over for food, housing, and other staple expenditures. Finally, the drop on oil prices will have a positive economic effect on certain domestic U.S. companies that benefit from lower energy prices. For example, airline companies will save huge amounts of money due to lower jet fuel prices.
The economic disadvantages that will arise from this will be for countries like Russia or Venezuela. Since these countries rely on oil exports, they will lose money because of falling oil prices. Another economic disadvantage will come to large oil and oil services companies. Their actions are becoming increasingly less and less profitable and the revenue from oil production is falling. Since the costs stay constant and their revenues fall, their profits will also fall, possibly becoming negative. Finally, a negative effect will also come to financial firms that invest in either oil company stocks or bonds. High yield firms that specialize in purchasing oil company debt could be in jeopardy as the price of oil falls. If the price of oil drops enough the oil companies will go out of business, and thus the high yield bonds will go into default. This would devastate these financial firms.
In the short term future I think oil prices will keep on dropping. In the long term I think prices rise to more normal levels. In the short term I think retail companies and other companies that benefit from high levels of consumer spending will do well. I think that transportation companies that prosper from lower energy costs will also do well. Oil companies and oil services companies will continue to be worse off. In the long term I think that these effects will revert back to normal.
Oil prices have declined about 40 percent in the past 7 months. Prices plunged after the Organization of the Petroleum Exporting Countries voted to continue to pump at the same rate last week and are still declining. 3 economic advantages of an oil price decline are: 1. “American motorists are saving $630 million on gasoline compared with what they paid at June prices, and they would get a $230 billion windfall if prices were to stay this low for a year.” 2. The vast majority of these savings will flow into the economy, as lower income households will be able to spend gas money on food, clothing, and other necessities. 3. “Every penny the price of jet fuel declines means savings of $40 million for Delta Air Lines” this could mean potentially cheaper flights for consumers. Economic disadvantages of an oil price decline are: 1. The annual revenue of OPEC members would shrink by $590 billion, money that will instead stay within the borders of the world’s biggest oil importers. 2. Annual revenue to oil producers worldwide will drop by $1.5 trillion. 3. Countries like Russia, are suffering as there commonly is so closely tied to the oil prices. These price drops have a massive impact on the macro-economy, for example, Russia is facing a recession due directly to the oil price reductions.
ReplyDeleteOil prices have declined by 40% in the past 7 months. This massive decline was due to the fact that OPEC decided to pump oil at a constant steady rate in the past 7 months that led to prices of oil dropping dramatically since oil supply has been also increasing. However, oil demand has not been following an increasing trend and so with so much oil in reserves due to overproduction, the work market has developed an unnecessary surplus for oil producers.
ReplyDeleteThree economic advantages of the drop in oil prices include a decrease in inflation, higher savings for airline industries, and increased consumer spending. Decrease in inflation is due to the drop of gas prices since oil prices dropped as well. The drop in oil prices allow consumers to spend their money in other industry departments such as food, clothing, and technology. Every airline must use high amounts of fuel to support their airplanes and so the lower oil prices allow the airlines to save millions of dollars on fuel which in turn lowers prices on airline tickets.
Three economic disadvantages of the drop in oil prices include OPEC losing $590 billion dollars of revenue, reduced annual revenue for oil companies worldwide by about $1.5 million dollars because of a 40% decrease in price of the International Brent Grade Crude Oil, and the fact that oil companies shall no doubt yield increasing amounts of losses.
The economic impact on symbiotic industries with price declines will be a negative one. The major oil companies will continue on following under OPEC’s oligopolistic control and the minor oil companies will not prosper. With the U.S. and its overproduction of oil, it will benefit itself while countries like Russia have suffered with losses and drops in their revenue. This means that the macroeconomy will have a definite drop in their overall revenue, yet different countries shall incur different fluctuations similar to that of Russia’s losses or the U.S. benefits.
In the past seven months oil prices have dropped nearly 40%. The reason for this is because the supply of oil has increased while demand has decreased, causing lower prices. OPEC, or the Organization of the Petroleum Exporting Countries, voted to continue pumping oil at the constant rate. The three advantages are that consumers save money from oil prices, businesses that rely on oil having less cost, and airlines being somewhat cheaper, as jet fuel will now be cheaper. American drivers are saving $630 million on gasoline compared with what they paid at June prices, and they would get a $230 billion payout if prices were to stay this low for a year. Three economic disadvantages of declining oil prices are decreased revenue for OPEC members, increased inflation in Russia, and value losses for American oil companies. The major oil industries will continue their reign as parasites to OPEC, while the other industries continue to struggle. Russia is predicted to be headed into a recession next year, while Venezuela is in an economic crisis which has been degraded by these oil prices. I still believe that in the end the price will raise back up again.
ReplyDeleteDuring the past seven months (since the peak in June) gas prices have decreased dramatically, about 40% to be exact which could spur one of the biggest transfers of wealth in history. With gas being $1 cheaper a gallon consumers are saving $630 million a day or $230 billion a year, which is now available to be invested into the economies of home countries instead of going outside borders to OPEC member countries. Even though the price decline of oil is hurting the economies of many countries like Russia and Venezuela, OPEC has voted to continue pumping oil at the same rate, which continued a trend spurred by a weak global economy and increasing US energy supply. There are many economic advantages to the lowering prices of Oil, these include: the money saved being reinvested to the economy in the forms of groceries, clothing and food; big companies like airlines and shipping services being able to lower their prices and save upwards of $40 million dollars a year for companies like Delta airlines; the falling oil prices lower inflation because of the heavy increase in consumer spending with all the savings on gas; and an increase in the size of the global economy. Sadly, with the good there is always bad and there are some economic disadvantages of the drastic drop in gas prices, which include: OPEC members annual revenue shrinking by $590 billion ; a tremendous drop in annual revenues of $1.5 trillion to oil producers around the world; and economies of many countries falling and reaching recession conditions like Iran, Russia and Venezuela. The effect on the dropping of gas prices in symbiotic industries in the macro economy will differ depending on which end of the spectrum you are looking at. Big business' that use a ton of gas like major worldwide airlines and shipping services, like Delta and FedEx, will benefit because they are saving a ton on gas. While big oil companies that are part of OPEC will continue to lose revenue because they are forced to follow what OPEC votes on and if they continue to go for the same production (which I hope they do) the prices will stay the same if not drop even more.
ReplyDeleteLooking to the several months, oil has declined by 40% over the last seven months, dating back to mid-June where the initial price drop occurred. Oil prices have declined because of two things. 1) A weak economy- A world economy that uses oil is good, but when its weak high prices cannot be paid, so this decreases usage because their is simply not enough money to purchase a single barrel (80) compared to a more affordable way of transportation such as walking. and 2) the expansion of U.S. energy supplies- Increases in US domestic shale oil has increased the production available to the world supply lowering prices.
ReplyDeleteOPEC, has yet to fully reach a consensus but great consideration is being placed on keeping gas rates the same. The result of this will take away smaller competition and meet global demand with affordable prices.
The three economic advantages of a decline in oil prices is 1) supporting the economy 2) catalyzing savings to more domestic products 3) supporting big corporations. These advantages play out by having less money spent on gas, consumers can invest the money back into the economy, creating growth, buying domestic products, and as well as the consumer, corporations save money which saves the consumer money in reference to prices.
The three disadvantages to the decline in oil prices is 1) incentive to use more oil 2) decreases in tax revenue 3) the environmental effects of having an increased usage of gas. These oil giants lose out on the billions being made from consumer and since this money is not going to the producers the economy benefits from this increased varied activity.
Looking at the world perspective the Macro-economic implications at particular countries like America and Japan would greatly benefit from the surge pf more economic activity made by the consumer. But governments like Russia and Qatar will suffur from the decline and will be forced into an economic recession as long as their collection systems are not reformed and fixed to counter the decrease in price.
Over the past 7 months, oil prices have declined about 40%. This is due to OPEC's decision to continue pumping oil. This results in a surplus, which lowers the market price. There are three advantages to this; the consumers save money from oil prices, businesses that rely on oil having less cost, and airlines being somewhat cheaper, due to Cheaper jet fuel. Three disadvantages are that OPEC annual revenue will decrease by 590 billion dollars. Brent-crude oil producers will reduce annual revenue for its producers by 1.5 trillion. Larger countries will usually lose out from this, and their revenue will also drop. While the oil companies might be losing out, it will benefit the economy as a whole. This way, the money that consumers use towards oil, can be beneficial in other areas of life.
ReplyDeleteOil prices have dropped 40% percent in the past 7 months due to the increase in production of shale oil in the US. Nearly 4 million barrels a day, decreasing the value. In response to the increasing supply of oil, OPEC decided to keep the price the same.
ReplyDelete3 economic advantages of the oil price decline is inflation lowering inflation. It is also boosting the economies of Europe, Japan, and America which are not in the best of shape. This would cause the slumps the economies have been in to shift and get back on track.
3 disadvantages of the oil price decline is Russia’s falling economy due to its economy being heavily reliant on the oil price. As long as it keeps declining, Russia’s economy could get worse. Other countries that depend on the sale of oil will also suffer. Also, businesses in serving oil will suffer from decreasing profits from the decreasing prices.
I think that the impact of the symbiotic industries as the prices decline could help to improve the current macro-economy. Currently, much of the world is struggling but as oil prices decline, it seems to slowly improve. Perhaps the trend will continue.
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ReplyDeleteOil prices have declined by 40% in the past 7 months. This massive decline was due to the fact that OPEC decided to pump oil at a constant steady rate in the past 7 months that led to prices of oil dropping dramatically since oil supply has been also increasing.
DeleteSome economic advantages to the oil price decline: Consumers save money from oil prices, businesses that rely on oil having less cost, and airlines being somewhat cheaper, as jet fuel will now be cheaper.
Russia and Venezuela rely on oil exports, they will lose money because of falling oil prices. Another economic disadvantage will come to large oil and oil services companies. Their actions are becoming increasingly less and less profitable and the revenue from oil production is falling. Finally, OPEC annual revenue will decrease by 590 billion.
Since Russia and Venezuela costs stay constant and their revenues fall, their profits will also fall, possibly becoming negative. This means that the macroeconomy will have a definite drop in their overall revenue, yet different countries shall incur different fluctuations similar to that of Russia’s losses or the U.S. benefits.
Oil prices have declined 40% in the past 7 months. They have declined due to increased output in the United States of shale oil and decreased global demand of oil. China, who was the leading demander of oil, has dropped demand significantly. OPEC met to discuss the price drops and when they dispersed without making any changes, the price dropped some more. The price decline has both economic advantages and disadvantages. 3 economic advantages are a potential 1% increase in the size of the global economy, increased consumer spending, and decreased spending on oil for large companies that depend on it. Low income families will have more money if they invest less of their money into oil which allows them to increase spending on other necessities. Companies, such as Delta Air Lines, save as much as 40 million dollars per penny decrease in oil price. 3 disadvantages of the price decrease are it hurts many oil dependent countries, small oil companies may go out of business, and investing may decrease. Some countries, like Venezuela and Russia, are extremely dependent on oil prices so their economy is shrinking as long as oil prices are low. OPEC members are losing hundreds of billions of dollars but will remain in business. Smaller oil companies who can't afford to suffer these losses may be forced out of business which will add to OPEC's market share which will allow them to raise oil prices to even higher levels in the future. Oil and petroleum make up about 15% of investments so investors are suffering. The future effects of these price declines will cause short-term recessions in countries like Russia and Venezuela. This will continue until small oil companies leave the industry and OPEC gains a greater market share that they have recently been losing. Once OPEC regains the market share, they will raise oil prices to high levels until the entire process repeats.
ReplyDeleteIn the past 7 months oil prices have declined 40% since its peak in mid-June. It has plunged last week after the OPEC voted to continue to pump at the same rate. It has declined because of supply glut and a weaker global demand. Supply glut is driven by increased U.S. sale production, while the weaker global demand has been driven by weak economic prospects. Because of these actions there are some advantages and disadvantages to oil price decline. Three advantages to the decline of oil prices would be 1) that consumers save money from oil prices 2) businesses that rely on oil having less cost 3) airlines being somewhat cheaper, as jet fuel will now be cheaper. Three disadvantages would be 1) The annual revenue of OPEC members would shrink by $590 billion, money that will instead stay within the borders of the world’s biggest oil importers 2) Annual revenue to oil producers worldwide will drop by $1.5 trillion 3) Countries like Russia, are suffering as there commonly is so closely tied to the oil prices. I predict that the symbiotic industries with price declines will have a negative impact. Major oil companies will continue on following the OPEC's control. Countries such as Russia have suffered with losses and drops in their revenue,while the U.S. and its overproduction of oil will benefit itself. Macro-economy will have a definite drop in their overall revenue.
ReplyDeleteOil prices have declined nearly 40% in the last 7 months. The reason the oil prices have declined is an over saturation of the market mainly created by fracking practices in the United States. It also did not help that OPEC decided to keep producing at the same volume. OPEC chose this course of action to try to force smaller players out of the market and be able to continue to produce their current output. Three economic advantages of lower oil prices are cheaper gas prices, cheaper food prices, and it frees up money so people can spend more during the holidays. Along with these advantages there come three disadvantages. These include a failing Russian economy, gas companies also will suffer from not being able to sell their fuel at a high price, and there will be less invested into green technologies because gas is cheap enough to justify environmental effects. If this continues then like OPEC predicted the market would adjust itself by putting smaller businesses out of business.
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ReplyDeleteDecreasing oil prices are costing oil-rich exporters and oil companies billions of dollars. The price of oil has decreased about 40% since its peak in June and continued to fall after OPEC voted to continue to pump at the same rate. It expanded U.S. domestic energy supplies. Americans are saving $630 million everyday compared to the prices paid in June. It could help the economy because the money not spent on gas could be spent on groceries, clothing and other goods. Big American companies are better off because every penny the price of jet fuel declines could mean savings of $40 million for delta Air Lines.
The annual revenue of OPEC members would decline by $590 billion. That money will stay within the borders of the world’s biggest oil importers. The 40% drop in Brent-grade crude oil over the past five months will reduce annual revenue to oil producers by $1.5 trillion. The losers include Russia, Iran, Venezuela and even the United States but mostly in the oil patch. The prospect of low oil prices over an extended period of time has grown so much after OPEC decided to maintain output instead of paring back to bring up prices.
Oil prices, in the past seven months, have declined by about 40%. These drop in prices has occurred due to the increased and possibly even overproduction of oil because of new practices including "fracking". This is increasing the amount of oil being obtained and sold. OPEC has decided to do nothing about the oil production or the prices, which is the unexpected take on this situation. Three economic advantages due to this decreased oil price is that we will be able to get where we need to go for less money, transportation will be cheaper due to the decreased oil price, and that it is more affordable for people so they will invest in other recreational vehicles such as dirt bikes and motorcycles. Three disadvantages are that OPEC will become more monopolistic by destroying their competition by letting them go out of business, Oil prices will be raised after said oil companies have gone out of business leaving us with more expenses, and transportation fees will be increased as well due to the increased oil price. In the future the demand for oil will raise due to loss of production because the small oil producers went out of business and OPEC will claim their top spot in the oil industry.
ReplyDeleteOil prices have declined by about 40%. The reason for that drastic drop is because of the increase of oil production due to practices such as "fracking" which is "the process of injecting liquid at high pressure into subterranean rocks, boreholes, etc., so as to force open existing fissures and extract oil or gas." The oil prices have continued falling too because of OPEC's decision to not act upon what is happening and to continue producing at the same rate at which they are. Three major advantages that come out of this situation is that now Americans will have more money that they are not spending on ridiculously high gas prices and can spend it elsewhere, lower gas prices, and food prices are also cheaper.
ReplyDeleteThree economic disadvantages are that the smaller oil businesses are now going to go out of business because of OPECs decision, which was only beneficial to the bigger businesses, once those small companies are gone the oil prices will rise again to maybe higher than previously, and the environment will also take a hit because more people will be investing in the gas now that the prices are so cheap.
The future includes OPEC rising to the top because they already forced the small businesses out by their decision to keep producing at a steady and constant rate which they were doing before, which those small companies could not afford to do. Once those small businesses are out OPEC has the liberty to set the price at basically any that they want, so expect to begin to walk in the future because my prediction is the price isn't going to be cheap.
In the past 7 months the price of oil has dropped about 40% this is due to the fact that there has been a increase in the supply of oil. This drop in oil will continue for a while as OPEC decided to maintain the status quo even though there has been such a drop in oil prices. Some economical advantages are increased consumer spending, the article finds that American motorists have saved $630 million on gasoline since June, which means money isn't just going to big oil companies and can other places. Another advantage is for low income families who can better spend their money, not just on gasoline meaning that low income families can better provide to the needs of their family which causes all sorts of benefits. Companies that use oil are also better off because if their product goes hand and hand with oil they can now cut the cost prices which increases their profits.
ReplyDeleteSome disadvantages are a decrease in profit for oil companies the article explains "The 40 percent drop in the price of the international benchmark Brent-grade crude oil over the past five months will reduce annual revenue to oil producers worldwide by a whopping $1.5 trillion." This reduction in their profits will once again cause oil OPEC to cut supply in oil raising prices once more. Also the countries that are major exporters of oil could also see a harm look toward Russian who's economy is falling because of low oil prices these countries bad economy could hurt the overall global economy. A Citibank report also finds these low oil prices will trim U.S shale output by 40%. In the future oil prices will be forced to raise because of all the losses seen in the economy and within OPEC own compaines.
In the past seven months oil prices have declined about 40 percent since its peak in mid-June and plunged last week after OPEC failed to reach a consensus on whether to cut oil production to stabilize oil prices. As a result of the failed agreement, OPEC will continue to pump oil at a constant rate. An oversupply of U.S. shale oil is attributed to the decline in oil prices as supply increases, the demand and price decreases.
ReplyDeleteAn economic advantage of an oil price decline is an increase in consumer spending. .American motorists are saving $630 million on gasoline compared with what they paid on mid-June. Lower-income households are expected to use more money to buy groceries, clothing, and other staples with the savings they are making from low gas prices. Falling oil prices are also lowering inflation. Another economic advantage is that big American companies are benefitting as well. Delta Air Lines’ savings accumulate to $40 million as every penny of jet fuel declines.
Economic disadvantages of an oil price decline include the shrinkage of annual revenue of OPEC members by $590 billion, inflation in Russia rising and the value of the ruble declining, and the disappearance of small-scale oil producers. The 40 percent drop in the price of the international benchmark Brent-grade crude oil over the past five months will reduce annual revenue to oil producers worldwide by $1.5 trillion. In relation to OPEC’s shrinkage of annual revenue, that money will fall into the hands of the United States, China, and Japan. The value of the ruble is expected to dwindle for what was a poor year for the Russian currency and inflation has crept up to more than an 8 percent rate. Oil prices have hurt Russia more than Western sanctions following Putin’s ventures into eastern Ukraine. Small-scale oil producers may go out of business and companies such as Valero may disappear altogether.
As for the future, I see static low oil prices up or even a drop in them until the next OPEC meeting which is scheduled on June 5th. Until then countries such as Russia and Venezuela will be suffering as they both deal with high levels of inflation and are heavily reliant on the oil industry. Russia and Venezuela will be hoping oil prices will increase at next summer’s meeting.
Over the past couple of months, oil prices have been declining to about 40% since its peak in June and has since been steadily decreasing since OPEC voted to continue pumping oil at the constant rate. The supply of oil has increased while demand has decreased, causing lower prices. OPEC did not take any actions in order to stop falling prices of oil. With the decline in oil prices some economic advantages would include the U.S. saving money on less oil drilling, increased consumer spending on other businesses, and an overall cheaper airline tickets, which can, in turn, lead to higher demand. Three economic disadvantages of the drop in oil prices include OPEC losing $590 billion dollars of revenue, reduced annual revenue for oil companies worldwide by about $1.5 million dollars because of a 40% decrease in price of the International Brent Grade Crude Oil, and the fact that oil companies shall no doubt yield increasing amounts of losses. My prediction is that as the oil prices continue to decline OPEC will schedule another meeting and cut the production of oil drastically causing the end to this “shift in wealth”.
ReplyDeleteRecent oil prices have had a significant drop, reducing 40%. The supply of oil is so high, it has caused the drastic drop. Whereas smaller producers would decrease their production to stabilize the price, OPEC has come together to decide not to, therefore severly impacting the price of oil. The decline in oil's price has a number of economic advantages including consumers can now spend on other necessary goods rather than high gas prices. There are overall cheaper airline fares and much lower prices for companies to run their businesses. With the new change, there are also disadvantages. OPEC, despite them being the cause, are facing a decrease in revenue. The worldwide economy is also taking a hit. Small importers have to face the consequences as well. In the future, I expect the price to rise again and change our recent "shift in wealth" back to its original state. Overall, the oil industry will probably never be the same again.
ReplyDeleteThe prices of oil have declined by 40% for the past couple of months. This is due to an increased output by the United States and the decreased demand for oil all across the world. OPEC has tried to address this problem, but since nothing was completed, the price had dropped even more. This situation has caused some advantages and disadvantages. This may lead to increased consumer spending since people can spend the money they used for oil on other items, and a decreased spending on oil for expansive companies. Yet the disadvantages lie in within the countries that remain oil dependent. They are now forced to look for other sources of energy. This may also lead smaller oil companies out of business seeing as they cannot afford to lower their prices. OPEC will probably remain, but will lose millions of dollars, but they can now afford to lower their prices now that competition is now being diminished. Many investors are suffering as well, since 15% of investors go to the oil business so the lowered prices will definitely have an adverse effect on investments.
ReplyDeleteThere will be an economic decline in oil dependent countries such as Russia, and as more small oil companies leave the business due to price competition, OPEC will remain within the industry since they can afford to lower their prices.