What the World’s Falling Oil Prices Mean for You
Over the last year, the price of oil has fallen dramatically, which has caused huge problems both for those who invested in it, and those countries that rely on its production. The knock on effect of the state of oil prices is huge. It will affect prices for the fuel industry, but whether they will pass on any fall in prices to the consumer is questionable.
Some believe that the reported slowdown in China’s economy has added to the drop in oil prices because China’s demand for oil has dropped. Along with this, the upsurge in the use of shale gas in the United States has not helped the declining price of oil.
The End of Fossil Fuels
It’s not that long ago that many people were concerned about what would happen when our supplies of fossil fuels ran out. Right now there is more concern about what is going to happen to the glut of oil – and what about those economies that rely on its production and sale? The economic problems of 2008, when oil was at its highest price yet, sent all the experts into a spin and in the wake of that crisis, the price of oil began to fall. More recently, the banks have had to readjust their finances downwards, as they hadn’t expected that the problem would be a glut of oil and falling prices.
What Effects Might the Drop in Oil Prices Have?
Whether the consumer will be financially better off due to falling oil prices is questionable, although there has been some lowering of prices at the petrol pumps. Right now food prices are either falling a little or remaining stable, which is good news for most ordinary people. Because so much depends on the price of oil, while the price of it is low, so is the rate of inflation. So, in the short term, the falling price of oil looks good for the ordinary consumer, who may find that their money is going a bit further than before the oil price crisis. On the other hand, if inflation falls too far or too fast, it can have a negative effect on a country’s economy.
If deflation occurs, this is an economist’s worst nightmare, and may only marginally benefit the consumer. Deflation can result in a downward trend for everyone, and initial falling prices could become a real problem for employers. If they are not getting sufficient returns for their goods and services, some may eventually go out of business, which affects everyone employed by those companies. However, the tendency of the market is to rise and fall, so it’s difficult to say whether oil prices will continue to drop, or whether consumption in developing countries may reverse the trend.
You have also probably noticed that heating your home is a lot more affordable in recent times, we are happy to pass on the drop in oil prices onto you the consumer. Visit Thompson Fuels today to order your oil and take advantage of the lower fuel prices in Northern Ireland.