Every major economy around the world is fueled by oil. But most of them don't produce the oil they use. Why the oil price is falling? Who benefit from the lower oil prices, and who suffer from them?
Productions by Regions in Million Tonnes
2004
2009
2014
The United States was blessed with abundant reserves of crude petroleum, high quality and easily taken from the ground. Up until 1973, they were the world’s biggest producer of crude oil, and even today remain the third biggest, ranking behind only Russia and Saudi Arabia. The long-continuing and inexorable decline in U.S. crude oil production resulted from the simple fact that oil is a limited resource - you can’t take the same oil out of the ground twice. However, with
Consumption by Regions in Million Tonnes
2004
2009
2014
Singapore tops the chart for oil consumption per capita at 121 tonnes, more than double the second highest ranked country, which is Kuwait at 59.2 tonnes per person. With 0.4 tonnes, Bangladesh consumes the least oil per person. This map clearly shows the economy status of each country.
The concept of supply and demand is fairly straightforward. As demand increases (or supply decreases) the price should go up. As demand decreases (or supply increases) the price should go down. Is it true for oil?
Welcome to the world of oil in 2015 — a repeat in surprising ways of the story 30 years ago. Between November 1985 and March 1986, the price of crude plunged by 67%. Between June 2014 and today, crude prices have fallen by 57% and could well head lower.
Oil prices have plummeted by 50 percent since September.
World economic growth was slowing. Europe was on its back. China’s economy was slowing, too, and that meant slowing growth in oil demand.
However, The 2014 oil price decline isn’t being driven by a decline in demand, instead it’s being driven by an increase in supply.
With technological advancements, oil production in the United States and Canada is now outstripping production in Saudi Arabia. Saudi were not cutting production to “defend” prices, market activity moved oil prices downward.
It could mean a $1.5 to $2 trillion transfer from oil-exporting countries to oil-importing countries. Japan will be a big beneficiary. So will China and America.