Rising crude oil prices is said to be the equivalent of a “coronavirus” for the global economy. These affect people’s income and wages through various economic spheres.
An epidemic of mass loss is spreading like a virus among oil-producing countries in the Middle East. The oil prices may reduce as much as 50% in the next few months. Is this the beginning of the end of the long-term oil boom?
Prices will certainly rise again when prices stabilize. The real question is whether the free market can save the day. Oil prices will climb higher until you notice some serious negative news about the big oil companies such as: “Diesel prices rocket up, steep drops in oil production”, “Oil & Gas prices soar,” and “Mortgage rates hit record highs.”
The main thing you must remember is that oil prices rise once production increases and falls once production decreases. Production also increases when investors go in for more oil leases. Further, rising prices mean additional expenses to government and corporate sectors as they pass on the cost to consumers.
We are all aware that a drop in oil prices can seriously damage the oil and gas industry. But will it trigger the collapse of the petroleum industry or will this event just drag the price of oil lower?
It appears that crude oil prices will continue to decline, as a result of falling prices in Asia, the biggest consumer of oil in the world. So will this price drop set off an oil bust? Experts believe that crude oil prices are going to fall because the Middle East produces so much oil and the Middle East has a big demand for crude oil.
The plummeting prices will affect OPEC oil-producing countries as well as non-OPEC countries. China too is likely to suffer from this low-priced oil. China is the biggest consumer of oil, but will it fall victim to the oil bust?
Several oil companies have already gone under. The oil bust will affect the oil companies’ credit ratings, financial infrastructure, and investments. People will lose their jobs, savings, and incomes; hence, further increasing the price of oil.
As a matter of fact, it is not so easy to find new sources of oil to the crude oil prices begin to rise. Foreign oil and gas have been used for a very long time and so they are easily available.
But the huge increase in demand of these new sources may force oil companies to start producing more oil. When there is more supply, there is less demand. In this way, oil companies can raise the prices.
Indeed, oil companies and consumers are most likely to suffer as a result of rising prices. The average person will get more income if oil prices are low. But when oil prices rise, you may just lose your job and the money you invested in your home.
Consumers will get more cash when oil prices are high and vice versa. Oil producers are worried about the situation, but they do not know what to do to solve this crisis.