The recent drop in oil prices has resulted in feelings of relief amongst gasoline consumers of America. However, investors and workers of major oil companies don’t feel the same way. The L.A. Times predicts that Texas, a state that saw a 15 percent rise in domestic production over the last five years, will suffer economically because of losses in oil companies’ revenues. Bloomberg, an economically–focused newspaper, reports that global oil prices have dropped 50 percent and speculates that OPEC (Organization of Petroleum Exporting Countries) does not know what the future of oil prices holds. The Sydney Morning Herald estimates that oil price drops will cost OPEC a revenue loss of $257 billion. The losses have spread into the United States, triggering self–sufficienct oil production.
OPEC controls 40 percent of today’s global oil economy. This means that the organization has a large influence on the manufacturing and pricing when it comes to oil. The Economist, an economically–oriented magazine, recently inferred that indecisiveness in regards to oil at the European Bank Coordination fiscal meeting in Vienna, the “Vienna Initiative,” and the loss of dependency in energy from Russia, a major manufacturer of natural gases and oil, have contributed to falling prices. On the contrary, secretary general of OPEC, Abdullah al–Badri, spoke at the World Economic Forum in Davos, Switzerland and said that OPEC knew exactly what they were doing when they reduced prices to an all–time low. He estimates that oil prices will explode to approximately $200 per barrel in the near future due to the inherent need of equipment.
British Petroleum CEO Bob Dudley, on the other hand, thinks that low oil prices may continue for an even greater amount of time. According to the BBC, the British Broadcasting Corporation, Dudley has recently argued that oil prices will continue to fall for a maximum of three years. In fact, he also predicts that in Europe, the price may drop below one Euro per liter ($1.12). These radically changing prices indicates to politicians and economists that the oil economy is confused.
In his recent State of the Union address, President Barack Obama said, “We believed we could reduce our dependence on foreign oil and protect our planet. And today, America is number one in oil and gas.” Although America is moving towards a self–sufficient oil production strategy, the recent drops in prices have come at a cost to the oil businesses within the nation.
Baker Hughes & Halliburton, an oilfield service provider based in the United States, has already laid off 11 percent of its workforce in the wake of a 60 percent drop in the price of crude oil. Another oil business which suffered was Schlumberger, an oil provider company based in Texas, that has predicted to let go 7,000 employees after the dropping prices decreased its profits. Failing United States businesses exemplify how the downfall of oil prices, particularly in the Middle East, affect everyone.
Nonetheless, the United States is booming within the controversial fracking business. Oil prices are so low in the United States because of the increment in the drilling for oil and the lack of dependence on foreign oil, and the BBC recently stated that the oil production level in America is at its highest in 50 years. Oil prices are so low in the United States because of the increment in the drilling for oil and the lack of dependence on foreign oil, and
What Americans should be concerned about now is maintaining energy production in the states and not regressing back to depending on other nations for oil. Lower prices cater to the consumers in America; yet, there should be better planning in part of United States companies to preserve jobs. It is not just for corporations in the United States to let go of thousands of workers.