How Will Falling Oil Prices Affect The Economy Globally? Essay
Due to a surplus in supply and unchanging rate in demand, the falling oil prices will benefit consumers but it could potentially hurt producers’ worldwide.
Historically speaking, oil is seemingly a very important part of human and economic development. In the early days, finding oil during a drill was considered troublesome, as the intended find was normally water or salt. However, in 1857, the first commercial oil well was developed in Romania. Consequently, two years later, the petrol industry was born in the U.S. During this time, much of the demand for oil went to the use of oil and kerosene lamps. Nevertheless, in 1901 the first commercial for mass production was drilled in Spindletop in southeastern Texas. At around 10,000 barrels of oil daily, this site produced more than all the other oil wells in the U.S. combined. Some say that the modern oil era was born that day in 1900. Later, oil replaced coal as the world 's most popular energy source. Today, oil in fuel makes it a high-demanded resource around the world. But to understand why it’s so important, we have to understand how are prices determined.
The biggest impacts to the price of oil are supply & demand, and market sentiment. The concept of supply and demand is simple: as demand increases (or supply decreases) the price should go up. As demand decreases (or supply increases) the price should go down. Like most things unfortunately, it isn’t that…