Effects Of Oil Prices On The American Economy

1528 Words Jun 11th, 2015 7 Pages
Abstract This research paper provides an overview on why there is oil price falling in the United States. It will examine the reasons that are influencing fall of oil prices. Additionally, the paper will seek to explore the effects caused by the fall of oil prices in the American’s economy.
In the recent months, the prices of crude oil have dropped from 140 dollars per barrel to 60 dollars a barrel in the latest date. To begin with, there is technological revolution in the energy extraction referred to as “fracking” which has significantly increased supply of natural gas and petroleum in the America, allowing them not to depend heavily on the foreign sources of crude oil. Secondly, Saudi Arabia and the other countries
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This was unexpected because oil prices had stabilized for about four years with each barrel costing 105 US Dollars (Miller 11). According to a research and simulation done by researchers in 2014, there was a prediction speculating oil prices would remain low in 2015 and marginally rise in 2016. However, in 2015 there has been a very sharp decline of oil prices. It is out of this concern that this papers the aims at addressing the following questions.
• What is the relationship between recent oil price decline and the previous episodes?
• Why are oil prices falling?
• Could the decline be foreseen as of mid-2014?
• What are the impacts of oil prices?
• Who benefits and who suffers from low oil prices
➢ What is the relationship between recent oil price decline and the previous episodes? The 2015 oil price drop is a very significant event as compared to the previous episodes relating to the oil price declines. However, the 2014 episode also qualified to be a significant event also. From 1984 to 2015, there has occurred six episodes of oil price decline. All these events have been characterized with either 30% decline or more than 6 months of low oil prices. The 2015 episode has been characterized by although both six months are not yet over but it is one and so month left. The 2015 oil prices decline has majorly been contributed by the Ukraine crisis that has led to suctions by the United States government to the USSR government. This has therefore affected the world
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