Declining Oil Prices

The article that I chose to write about is on the drastically decreasing oil prices. According to a CNN article the price for a barrel of crude oil fell Friday to somewhere near $59.00 a barrel. Not only does this article go hand in hand with our learning this week because the topic deals with our economy, but it also talks about supply and demand. The article talks about how the dropping oil prices could cause problems for countries who count on exporting oil as a means of income. While they will still be making money off of the oil they are selling they won’t be making as much money as they are used to making. It also talks about how if there aren’t any disruptions or a cut in OPEC output the oil storage in the West could possibly be overflowing next year (Thompson, 2014). That is something that hasn’t happened in a long time.

There are many reasons why the government isn’t stepping in and bringing the supply and demand back inline. Some of the reasons listed are the consumers that have found ways to be more energy efficient won’t be drawn back to oil simply by cheaper prices (Thompson, 2014). Another thing that article talks about as far as supply and demand is the fact that some governments are using this opportunity to reduce energy subsidies. What this means is that users won’t get the full benefit of the cheaper crude oil prices leaving them less likely to consume more oil (Thompson, 2014). One other reason that the government isn’t getting supply and demand back inline is because of the fact that with such a weak economic growth in most parts of the world, flat wages, and such a high chance of deflation will blunt the stimulus of lower prices.

The basis for this article was to warn that the lower the crude oil prices get the more uncomfortable some people are going to feel. Another reason that this article was written was to let people know that while a lot of people are going to enjoy the cheaper gas prices that come along with oil being cheaper there...