The price of a barrel of crude oil has plunged to below $50 for the first time in more than 5 years. There are numerous theories as to why this had occurred, but the why is not as important as to the result.
Lower gasoline prices at the pump and lower heating oil prices are the most obvious benefits to the consumer, but this only represents the tip of the iceberg. Whether we like it or not, oil fuels not only our cars but also our economies. It’s a fact that the buoyancy of the World’s economy is a direct result of the price of crude oil. When it suffers a significant drop so does our economy. Nobody gains!
At $45 a barrel it is no longer viable for tar sand or shale oil to be pumped. America’s energy independence becomes a myth, and Western Canada’s oil sheiks will fold up their tents and slink away into the night. The pipeline to Houston will be a non-issue. Russia continues to provide gas and oil to most of Europe and China, but for how long? And if Russia falters, where is the alternative? Venezuela will go bankrupt and all oil from the OPEC countries will once again be centered in the Arab nations of the Middle East. Not a comforting fact.
For the sellers of oil and its by-products, and there are millions of them around the world, their profit margins will be cut in half resulting in a drastic reduction in their purchasing and spending power. Markets will spiral downwards and major industrial investments will stop. Currencies will have to be revalued, and many countries will slide back into recession.
So next time you fill up your gas tank with ‘cheap’ gas, don’t thank your lucky stars or your Government’s energy policies, but consider carefully what this windfall is really costing you.
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