As a new era of lower prices is coming into town (both literally and figuratively), which involves intranational incorporation of both hydraulic fracking and extracting shale oil (might as well add Canada to that mix), our dependence on crude oil sourced from outside nations has drastically decreased. Not that our global economy was in the best shape to begin with, but now it’s even more askew than before, especially that revolving around the Russian and Middle Eastern economies that depend heavily on exporting crude oil to fossil-fuel-dependent nations. Current kings of the crude oil economy in the Middle East, such as Saudi Arabia, Kuwait, and UAE, are having to make budget cuts on social programs and subsidies, as well as making reductions on paying toward whatever national debt currently exists.
The effects of inconsistently-unstable global oil prices aren’t just affecting multiple nations only in an economic manner. More countries are intertwined with one another than ever before. Russia has been helping Venezuela to pay off national debt, but if crude prices drop even further, or stay at a below-average price,
even further, or stay at a below-average price, Venezuela will have to default on its payments toward said debt, which would be a severe contraction to Russia’s own economy to. Point being, if Venezuela goes down, so does Russia. In fact, both Russian and Iranian economy are teetering on the edge, because of certain international sanctions. Because of the Iranian economy in particular, Iraqi, Libyan, and Yemeni could experience a drastic increase in the already-present violence that isn’t so much being experienced, as being lived. Violence is sadly a lifestyle nowadays in said region as a result.
Let’s step back from the big picture, and focus on a slightly different perspective: while the nations that have economies dependent almost entirely on crude oil have been suffering to some degree, the world’s three largest economies (United States, China, and Japan) have substantially benefitted from falling oil prices. However, if prices continue to fall even further, it could have a more negative effect on American shale oil companies.