Gas Prices At Lowest Prices Since 1999. Winners and Losers
Stopping at the pump doesn’t empty your bank account as much as it used to in previous months.The New York Times states,”Earnings are down for companies that have made record profits in recent years, leading them to decommission more than half their rigs and sharply cut investments in exploration and production. More than 200,000 oil workers have lost their jobs, and manufacturing of drilling and production equipment has fallen sharply”. The reason behind the drop is the United States is starting to produce our own oil which is causing competition between countries such as Saudi Arabia, Nigeria, and Algeria causing them to drop prices. Americans are also demanding less oil due to more energy efficient cars. Due to the drop households are expected to spend $750 dollars less on gas this year (“Oil”). This money can be used for other things that will help suppliers during the holiday season because people will have more money to spend that they did not have before.
Some of the losers of the low gas prices are going to be the countries that have main exports of gasoline: “. Venezuela, Iran, Nigeria, Ecuador, Brazil and Russia are just a few petro states that will suffer economic and perhaps even political turbulence. Persian Gulf states are likely to invest less money around the world, and they may cut aid to countries like Egypt”(“Oil”). Other people that are suffering from the low cost of gasoline are workers: “Chevron and Royal Dutch Shell recently announced cuts to their payrolls to save cash, and they are in far better shape than many smaller independent oil and gas producers that are slashing dividends and selling assets as they report net losses”(“Oil”).
Oil prices are not likely to recover anytime soon and although they benefit the consumer many suppliers are trying to prepare for the worst and lay-off many people so they can survive the bust in the oil market.
Works CitedKrauss, Clifford. "Oil Prices: What’s Behind the Drop? Simple Economics." The New York Times. The New York Times, 5 Oct. 2015. Web. 1 Dec. 2015.