The Low Price Of Oil

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The low price of oil can be directly felt when filling up a car’s tank with gas. For many years when the price of oil drops, there is growth within the economy, however, the recent decline has yet to deliver the traditional economic boom. Low oil prices have a negative impact on the U.S. economy as well as the global economy, with a direct correlation to politics. The low prices affect the U.S. economy in many ways. Cheap oil halts growth in businesses and makes companies less profitable. These actions will have ripple effects throughout the U.S. as a whole. There are small segments of business that will be more successful when oil is so inexpensive but the negatives far outweigh the positives. According to a post by Patrick DeHaan for…show more content…
Countries that have formed over large deposits of oil now find themselves key players in the oil game. Saudi Arabia sits atop the largest oil deposits in the world. Many scientists believe that the Saudi’s have over 250 billion barrels of oil within their borders. Gregory Gethard, a senior writer for Investopedia, explains “The other Middle Eastern nations with sizable quantities all have about one-half of Saudi Arabia 's reserves. They include Iraq, Iran, Kuwait and the United Arab Emirates.” These countries, and more, for a total of 12, form what is known as OPEC, the Organization of the Petroleum Exporting Countries. The OPEC cartel claims to control around 78% of the world’s oil reserves. Since OPEC controls the majority of the world’s oil supply they can tweak the price of oil depending on their fiscal goals. If they want to make more money they can withhold oil from the economy, increasing the price per barrel, and if they wanted to drop the price of oil, they can release the storage of oil and flood the market. A common benchmark for the price of oil is called the OPEC basket, this is a combination of oil from the OPEC cartel. A process called refining needs to take place before oil can be used. To put it simply, the refining process starts by boiling crude oil which turns into a vapor. In an article for Investopedia, Gethard states “Different types of oil are formed
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