SHAFAQNA (Shia International News Association)- This week, oil fell through the price floor of $60 a barrel and gas at my local filling station was $2.26 a gallon.
That’s great news for commuters and almost every business, but wonderfully bad news for crude producers.
If oil prices remain low through next year, the effect on Russian Federation to Venezuela, will go from damaging to devastating.
But Western economies (and China’s) stand to benefit, with cheap oil possibly tickling Europe’s snoozing markets awake. Even most underdeveloped states will get a welcome break.
This price plunge has been driven by Saudi Arabia. While it’s true that part of Riyadh’s actions respond to the energy renaissance in North America, the greater motivation is damaging Iran.
The Saudis believe they can no longer rely on the US to control Iran’s nuclear program, so they’re out to do what sanctions couldn’t.
There’s no love lost between the Saudis and the Russians, either. The Saudis want the Syrian government to go. Moscow wants to keep it.
The Saudis aren’t doing any of this to help the US, but it helps the US just the same. Now the key issue is: How long will prices stay low?
Markets can be unpredictable, but an emerging global glut of oil, decreasing demand and greater efficiencies suggest that petroleum products should remain relatively cheap — with fluctuations — for the next few years.
That’s good news for free markets, but a nightmare for producers everywhere, New York Post reported.