The prediction about the future impact on current low oil price - Essay Example

The prediction about the future impact on current low oil priceOil prices have slumped almost by 50% ever since the last summer resulting from the longest running slump for twenty years. This is mainly because, the United States shale oil, and to a smaller degree the return of the Libyan oil to the market, has increased supply but a slowdown in the European Union and China economies has abridged demand (Richard Anderson Business reporter, 1). With the thriving United States shale industry indicating minimal signs of decelerating, there are good explanations to predict that the current fall in the price of oil will carry on for some time.

This fall indicates that the debt bubble that has been holding the global economy for quite a very long time ever since the World War II is failing to increase significantly. If the debt bubble slumps, then we will be in a big problem (Tverberg).According to Richard Anderson Business reporter, (1), OPEC, the cartel of chief global oil producers, has at many times being stepping in to stabilize the prices by cutting production. However, this time round OPEC said that it was not willing to do so even if the oil slumped to $20 a barrel.

Without OPEC inventively backing up the oil price, and with possibly weaker demand owing to the slow economic progress, the oil prices are expected to stay at below $100 for ages to come. The future markets indicate the prices will recuperate slowly to reach about $70 by 2019, although numerous experts predict a range of $40-$80 for the subsequent few years and anything more detailed is ineffective. At these prices, several oil wells turn to be uneconomical, and those at higher risks are the ones progressing hard to gain access to reserves, like deep-water wells.

Therefore, any plans for polar drilling are expected to be dropped for the predictable future (Rasmussen and Roitman, 2).Work citedRasmussen, Tobias N, and Agustín Roitman. Oil Shocks in a Global Perspective : Are They Really That Bad ? N.p., 2011. Web.Richard Anderson Business reporter, BBC News. "BBC News." Are low oil prices here to stay? (2015): 1. .Tverberg, Gail. "OUR FINITE WORLD." Low Oil Prices: Sign of a Debt Bubble Collapse, Leading to the End of Oil Supply? (2014): 1. .