Oil Toil
The price of crude oil continues to decline as it falls below $90 a barrel, an all time low since 2012. Due to the recent shale boom, U.S. has taken the lead as the world’s largest producer of liquid petroleum (Smith & Zhou 2014). This surge in domestic supply has reduced the heavy reliance on global exports from Russia and Saudi Arabia. Although this new lead may be good news for daily consumers at the pump, it brings caution to global markets as the top three producers of oil pump out over 30 million barrels a day, while demand continues to decrease.
The oil markets can manipulate and project the strength of world markets. Decreasing dependance on Russian oil, coupled with trade sanctions against the nation where oil amounts to 46% of its revenue, will surely put Russia in a hot seat (Mufson 2014). Meanwhile, Asian markets are enthusiastic of more accessible and lower prices from the Middle East and Alaska. Furthermore, the United States’ GDP increases as the price of oil goes down, hypothesizing a growth and strengthening U.S. economy.
Could the new low in oil prices benefit us Canadians? Unfortunately, despite the lower gas prices now at our gas pumps, the fluctuating oil prices rather troubles our Canadian markets. It seems as though the Canadian economy will be taking a quick dip into the cold.
Smith G., & Zhou M.. “WTI Oil Plunges Below $90 on Supply Glut; Brent Declines”. Bloomberg, Oct 2. 2014. Web. Oct, 2. 2014.
Mufson, Steven. “Oil prices are falling”. The Washington Post, Oct 2. 2014. Web. Oct, 2. 2014.