The Economy Of The Oil Industry - 952 Words

Over the last years, the oil industry practiced its deepest recession since 1990s. That being said, the recovery for this industry finally starts getting better. The Organization of the Petroleum Exporting Countries approved to change the production last year, 2016. This arrangement has been holding over to this year, with oil prices increasing for the past several months. But in recent weeks, United States records have been found greater oil prices have been faded. Experts think it will be years before oil returns $100 a barrel, a price that was regular till late 2014. But after the oil price recovered from below $30 in early 2016 to over $50 by the end of the year, there was increasing certainty in the industry that crude oil could rise†¦show more content†¦This is why prices began to decrease. In December 2014 the price went down to $55.48 per barrel. At that point, many people projected that Saudi Arabia and other oil producers will cut back on their own production to ch anges prices, as they had in the past. Of course that didn t happen. Saudi Arabia decided to increase production in order to keep its market share, hoping that the decrease in oil prices would crush US oil industries, who require higher prices to stay gainful. And that s when things got really interesting. Ever since Saudi Arabia s decision to maintain output in late 2014, prices have kept dropping and reducing. This happened because supply continued strong and demand became weaker than estimated. This shows that US drillers turned out to be far more adaptable to low oil prices than the Saudis thought. As firms cut costs and increased productivity â€Å"in order to keep the oil flowing†. (Oil Prices: What to Make of the Volatility.) In the meantime, major developing economies like China, Russia, and Brazil put a discouragement on the oil industry. An unusually mild winter helped overpower demand for heating oil, and also a stronger dollar means that some countries now have to pay more for crude imports. Car owners in places like the United States, Europe, and Japan are paying less for gasoline, which means they have more money to spend on other things than gas. This is why oil businesses here in the UnitedShow MoreRelatedOil Industry And Its Effects On The Economy1219 Words   |  5 Pagesbecause of the oil production. â€Å"The rapid expansion of the oil sector has stymied the development of other parts of the economy.† (Hill 88) Nigerian people who survived on agriculture economy were affected the most because of the oil pollution. Extracting oil hurts the environment a lot by creating pollution in the soil and waters due to oil spills. Therefore, agriculture decreased and many people were left without harvest to sell and others lost their job in the cultivating industry. 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