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Economics
Whats
Behind
the
Plunge?
Simple
The oil industry, with its history of booms and busts, is in a new downturn.
Earnings are down for companies that have made record profits in recent years, forcing
them to decommission more than half their rigs and sharply cut investments in
exploration and production. More than 100,000 oil workers have lost their jobs, and
manufacturing of drilling and production equipment has fallen sharply.
The cause is the plunging price of a barrel of oil, which has been cut roughly in half since
June 2014, reaching levels last seen during the depths of the 2009 recession.
Prices recovered a bit in the spring, but have fallen again in recent weeks. Executives
think it will be years before oil returns to $90 or $100 a barrel, pretty much the norm
over the last decade.
3.
As the price of crude oil fluctuates, why some countries are faring
much better than others.CreditVideo by Quynhanh Do on Publish
DateJanuary 27, 2015
Who loses?
For starters, oil-producing countries and states. Venezuela, Iran,
Nigeria, Ecuador, Brazil and Russia are just a few petrostates that
will suffer economic and perhaps even political turbulence. Persian
Gulf states are likely to invest less money around the world, and they
may
cut
aid
to
countries
like
Egypt.
In the United States, Alaska, North Dakota, Texas, Oklahoma and
Louisiana will face economic challenges.
Chevron and Royal Dutch Shell recently announced cuts to their
payrolls to save cash, and they are in far better shape than many