Even though crude oil producing countries had voiced their “howls of derision” over plunging crude oil prices, but is downward trending crude oil prices good for the global economy?
By: Ringo Bones
Crude oil producing countries and multinational crude oil extraction companies had been complaining since the 2008 global credit crunch that if crude oil prices fall below 100 US dollars per barrel, there would be no economic incentive anymore for crude oil exploration and develop new finds. But most economists beg to differ that a downward trending crude oil prices will be good for the global economy and primarily benefits the developing economies. Both premises can’t be true, right?
After Operation Desert Storm, economists around the world noticed that heavy crude oil dependent countries with still developing economies – like Bangladesh for example – experiences a 1 percent rise in GDP for every 10 US dollar per barrel fall in crude oil prices. Though why these countries haven’t moved away from crude oil may be blamed on conservative business think tanks in Capitol Hill making their economies more crude oil dependent every decade after Operation Desert Storm.
During the start of 2014, crude oil was trading at 110 US dollars per barrel and by October 20, 2014, it was already down to 85 US dollars per barrel. Bond and hedge fund pundits are already predicting crude oil prices to fall to 70 US dollars per barrel before the end of 2014 while 50 US dollars a barrel crude oil prices is not out of the question during the first quarter of 2015. Would the Rockefeller Foundation moving away from crude oil sourced funding near the end of September be playing a part of this downward trending crude oil trading price? Who knows, at least downward trending crude oil prices has a geopolitically advantageous effect of curbing the deleterious military adventurism plans of fascist-leaning crude oil producing states like Iran and the recent Vladimir Putin run Russia.