Notes On Falling Oil Prices - 1261 Words

Eric Bach-Crosby Gina Cassady ECO2013 October 11, 2015 Falling Oil Prices Just as any market experiences it’s fair share of ups and downs, the oil industry is currently running down a slippery slope. From coast to coast across the United States, the price of gasoline has plummeted to levels were last seen during the recession of 2009 (Krauss). Although prices have somewhat improved at various points throughout 2015, average prices have remained low and are expected to stay that way for the next several years. Many people are simply overjoyed that their wallet seems a little less empty and it now takes only half the cost to fill up their gas tank, however, in the greater scheme of economics this is definitely not the best for the economy†¦show more content†¦One major factor that contributed to their recession is the fact that Chinese currency, the yuan, was devalued on August 11th of this year; a decrease of 4.4% which in turn led to their stock market plunging into a crash (Wolff). Consequently making the majority of imp orts into China more expensive and leaving their citizens with less purchasing power for goods and services. By the population left without being able to make as many purchases, the industrial activity and manufacturing of goods slowed down thus meaning that if not as many goods are being produced then not as much gasoline or oil is being used for assembly lines, transportation, etc (The Causes†¦). To put simply, if there are less funds circulating, the public will spend less, fewer goods and services will be created, and less oil and gasoline will be consumed. With China being the second largest economy in the world, the downfall of their own market tends to rattle other countries in close business relations, one of which is the United States (Ranasinghe). Aside from foreign markets, the method of extracting oil from the Earth known as hydraulic fracturing, commonly known as fracking, is in direct relation to the current price drop (How Does Fracking). Fracking accelerates how quickly oil is taken from beneath Earth’s surface and processed (How Does Fracking). Since this speeds up the practice and therefore increasing the current supply, oil prices are cut down. Although