The 25 percent or so slide in oil prices since the summer could boost consumer spending and business investment in economies around the world as fuel bills fall.
But not everyone’s a winner. Oil-producing countries such as Russia and Venezuela, which have high extraction costs and whose budgets rely on assumptions of relatively high energy prices, stand to lose out. And lower prices could eventually slow booming production in the United States, offsetting the benefit of lower energy costs for consumers and businesses.
U.S. oil dropped 2 percent more Tuesday to $77.19 per barrel, at one point falling to $75.84, the lowest level since October 2011. It was trading at $100 a barrel as recently as July. Brent, the international benchmark, declined 2.3 percent to $82.82, having earlier fallen to $82.08, its lowest level in just over four years.
A report by the Oil Price Information Service, an independent gatherer of petroleum data, characterized Tuesday’s oil market moves as a “panic.” “Global traders are in essence voting on a referendum as to whether they believe that a price war is looming among OPEC and non-OPEC producers,” the service reported, “and for the moment, they are casting a ‘yes’ vote for the conflict.”
Consumers are already benefiting. The AAA auto club reported Tuesday that the national average price for a gallon of regular gasoline had dropped to $2.97 ($2.65 in Dallas). That’s down 6 cents from a week ago, 33 cents from a month ago and 28 cents from a year ago. The average household in the U.S. consumes 1,200 gallons of gasoline a year, translating into an annual savings of $120 for every 10-cent-a-gallon drop in price.
Courtesy - http://www.dallasnews.com/business/headlines/20141104-saudi-oil-price-cut-likely-to-stimulate-world-economy.ece