Impact Of Global Economy On The Economy Essay
Energy generation and consumption is a vital part of the global economy. It enables manufacturers, distribution companies, and buyers to move and create goods. This activity grows the economy and increases wealth for stakeholders. After reaching $105.7 a barrel in June 2014, crude oil dropped to $36 a barrel in December 2015. As oil is a driving force in the economy, and with the 2007 recession in near memory, some observers have cited concerns that sustained low crude oil prices could lead to another market downturn. Developing nations like China and India have enjoyed fast expansion, with growing GDPs between 7 and 8% annually (Papatulica, 2016).
Western nations like the United States have had a much slower recovery, nearing 1% annual GDP growth (Brandon, 2016). The unpredictability of oil prices makes it difficult for governments and firms to anticipate what the future holds. While economists disagree on what the outcome will be, it is certain that another recession could have catastrophic effects on the global economy. The purpose of this research paper is to better understand the probability of another recession resulting from low oil prices, and what, if any preparations should be made for it.
History of oil prices. Not long ago, oil prices were above $130 a barrel, and consumers paid in excess of $4 a gallon at the pump (Brandon, 2016). Oil companies made record profits, and some economists pointed to the inherent market instability at the…