StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Falling oil prices are bad for the economy - Essay Example

Cite this document
Summary
This is from 147 dollars a barrel, in the year 2008, to less than 50 dollars a barrel, as from this year (Morgenson, 4). This is more than a half of the reduction in the prices of oil. The greatest beneficiaries in the reduction…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER99% of users find it useful
Falling oil prices are bad for the economy
Read Text Preview

Extract of sample "Falling oil prices are bad for the economy"

Download file to see previous pages

This includes that of United States, which is one of the major consumers of oil and oil related products (Pahl & Anne, 33). This paper argues that the low prices of oil, as they are witnessed currently, are very harmful to the economies of the world. One of the major impacts of the falling oil prices is the destruction of economies that are heavily relying on oil. Examples include the Russia, Venezuela, Iran, and even Saudi-Arabia. In a recent rating of the Venezuelan debt capability, the country was downgraded, and this is because of a drop in the oil prices, by more than 40% (Johnson, 5).

This is because the country had a very low level of international reserves and foreign exchange. Furthermore, Venezuela is also experiencing economic declines, and this is because it is unable to pay off its government workers, and offer essential services such as health care services. In fact, President Maduro was able to tour most oil producing countries, in a bid to influence them to reduce the production of oil, but he was unsuccessful. Russia is also another country that is negatively affected by a low price of oil (Johnson, 5).

Just as Venezuela, the Russian economy is dependent on oil; as a result, the value of the Russian currency has depreciated. Just as Venezuela, the Russian bonds are trading at a very low price, and this means that the two countries are experiencing a recession. In a recent credit rating of Russia, the rates of defaults were very high, and this means that trading in Russian bonds or debts was very risky. This is an indication that the Russian economy is experiencing a recession, mostly because of oil, and partly because of the economic sanctions that the European Union has placed on Russia.

Pahl & Anne (44) explains that cheap oil are not only hurting the economies of states that are relying on the production and exportation of

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Falling oil prices are bad for the economy Essay”, n.d.)
Retrieved from https://studentshare.org/miscellaneous/1684963-falling-oil-prices-are-bad-for-the-economy
(Falling Oil Prices Are Bad for the Economy Essay)
https://studentshare.org/miscellaneous/1684963-falling-oil-prices-are-bad-for-the-economy.
“Falling Oil Prices Are Bad for the Economy Essay”, n.d. https://studentshare.org/miscellaneous/1684963-falling-oil-prices-are-bad-for-the-economy.
  • Cited: 0 times

CHECK THESE SAMPLES OF Falling oil prices are bad for the economy

Problem of the Inflation in The UK Economy

‘s inflation rate, its fluctuation in the economy and its effects on different sectors.... There are two factors mainly working in the economy, i.... The Cost-push inflation is generally there to lower the aggregate supply(short run) and the Demand-pull inflation is mainly to increase the level of demand in the economy.... If the economy is deeply affected by inflation, the economic impact can be sub-divided into two major parts, i....
8 Pages (2000 words) Essay

Federal Reserve Dealing with the Dollar

hellip; The article succinctly states that the economy “is limping rather than slumping”.... The weaker dollar has contributed greatly to stabilizing the economy and holding the fort while all havoc breaks loose.... They need to seriously come up with a better plan to bail out the economy.... And now as we are saddled with insane oil prices and rising inflation, its high time the Fed came clean and acknowledge their folly....
2 Pages (500 words) Essay

Establishing a Continuing Business Model Innovation Process

lan Greesley decided not to give any precise outlook for the economy development in the long term due to increasing baby boomers retiring factor, huge oil and gas prices and no precise way to estimate the path through mechanism of higher interest rates and inflation.... As the Federal Reserve chairman stated, the economy in the nearest year will suffer from the largely increased crude oil prices and gas prices, the negative affect of which is aggravated by the hurricanes which made consuming oil from some plants impossible with overall world demand for these energy resources being a way ahead of the supply....
10 Pages (2500 words) Essay

How does the U.S. Economy affect the global economy

In 2006, the world inflationary pressure were increasing, One of the factors creating this world economic debacle is the rising oil prices.... However, the impact of rising oil prices on inflation and output is currently muted as compared to prior inflationary periods in the United States and the world.... The unbelievable element is that the Dow Jones Industrial Average--the Americans' main share-price index--is roaring, against a slew of evidence that beyond Wall Street, America's broader economy is in very serious trouble....
3 Pages (750 words) Essay

Prospects of the UK Economy in 2008

The oil prices were soaring and the sub prime crisis in the United States breaking out globally in august 2007 further worsened the conditions.... The year 2007 was a year of surprises for the UK economy.... The UK economy fared really well as per the market expectations.... hellip; The growth of UK economy was expected to be 2.... The UK economy was able to make significant headway despite harsh market conditions....
8 Pages (2000 words) Essay

Business-Finance Paper -Read FULL directions

There is a projected ballooning of Russia's fiscal budget deficit due to the severe negative impact of falling oil prices on the ability of the Russian government to finance its operations.... With the economy expected to contract in 2015, the challenge for Russia is to be able to prudently make use of its dollar reserves to keep the economy afloat and the ruble from falling off a cliff in terms of purchasing power.... The expected budget deficit for 2015 is about two percent of GDP, and the sanctions on Russia by the west due to the former's meddling in Ukraine, plus the threat of a credit rating downgrade, all conspire to make it difficult for Russia to keep the economy on an even keel moving forward (Andrianova)....
4 Pages (1000 words) Essay

Port Report-Oil Prices and Stock Market Behavior

For example, the cause of recent Russian currency debacle has relation to the falling oil prices.... Stefanova, 2014) Consumers in Western countries take falling oil prices as an instrument to result in lesser tax burden.... This way the falling oil prices prove to be positive for the global economy, as these countries can look for heavy reduction in lower inflation rates.... As Gulf countries are responsible for bulk of global oil production and distribution, it is essential to understand the impact of international financial activities… While doing so, the paper also deals, briefly with the subject of global stock markets' volatility in relation to changing oil prices. The price of crude oil has gone down by almost 40 percent during the last six months of This resulted in the reduction of retail gas price from USD 3....
5 Pages (1250 words) Essay

The prediction about the future impact on current low oil price

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.... Are low oil prices here to stay?... Low oil prices: Sign of a Debt Bubble Collapse, Leading to the End of Oil Supply?... 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....
1 Pages (250 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us