Oil Prices Dropping in 2015
With gas and oil prices so slow these past couple of months, it’s no surprise that barrel prices are at $70, which is 40% lower then it was in June earlier this year. These prices are based to what The North Sea Benchmark, Brent crude. These low prices have caused energy stocks to lose an estimated $500 billion this past week alone. In order for the North Sea Benchmark to balance the budget in 2015, they must be selling their barrels at $93 in Saudi Arabia, and as much as $120 a barrel in Russia.
According to analysts there are three major factors that have gone into these dramatic spikes in oil prices are:
Recent US pipelines and fracking that have been growing the US has been highly effective the past few years which has dropped the need to get oil and gas from other international distributers. This and the high number or electric and hybrid cars trending in the US has caused consumers to need less gas. Since the North Sea Benchmark prices are so low though, the US gas and oil suppliers have been buying these barrels at $70 a barrel. If this trend continues, gas prices will continue to further drop and be at a low that has not been seen since the early 2000’s.
2. No demand needed in developed countries
Developed countries which have a stable oil economy and are able to hold off on buying oil. This is because of the low oil prices around the globe, so rather then selling the oil at a very low price, keeping it for their own economy and selling it at their normal prices, keeping their domestic oil economy stable.
3. China’s economy is down
China accounts for about a third of all the worlds gas consumption alone. The Chinese economy has been in a slump recently so the usage of gas and oil has dropped drastically. It goes hand in hand that with China’s falling economy that gas prices will be downsince the demand for gas and oil is not there in the most demanding country in the nation.
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