By Jinsui Y.
The price of oil continues to fall in international
market. In this year, It is reported that it plummeted to 30
dollars per barrel in January 12. This is the lowest price from 2004 to
now. However, in 2014, they it has reached to 108 dollars per barrel. It is
means that the oil price has decreased 72% from July 2014 to now. This declination
is too ridiculous too be convinced. However, it is the fact.
There are some reasons for the increase of the oil price.
The first reason is that the oil police in OPEC are not efficient. The
statement for OPEC which is found in 1960 is to coordinate and unify all the
member countries and make the oil market stable. Now there are 12 member
countries in OPEC which control more than 78% oil reserves in the world.
However, nowadays they increase the supply of oil blindly in order to gain more
profits. As the result of it, the supply of oil is exceeds of the demand.
Therefore, they price declined rapidly.
As the result of the low price of oil, the
countries whose economy is mainly relies on the oil supply is under a severe
pressure, such as Venezuela, Columbia, and etc. Even as the richest oil
supplies country, Saudi Arabia is also inescapable from that pressure because
90% of the income of this country is from the oil trade. What is worse, as the
prediction from economist, the budget deficit will increase 5% for Russia, if
the price of oil continues to increase.
However, every coin has two sides. The decrease of the
oil price also brings advantage in some aspects. For some European countries,
it has benefits for them. As the Deutsche Bank said it will promote the
increase in economy in Eurozone. What is more, World Bank predicted that
per 30% declination in oil price will lead 0.5% increase of world economy as a
whole.
References:
Clifford, Krauss. NYTime. Oil Prices: What’s Behind the Drop? Simple Economics. 30 Mar 2016. Web. 28 Feb 2016.
Image from:
Oil Explainer. Digital image. http://i1.nyt.com/images/2016/02/17/business/oil-explainer-feb/oil-explainer-feb-jumbo.jpg. 17 Feb 2016. Web. 28 Feb 2016
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