The Oil Price

The world price for crude oil has declined from 107 dollars per barrel last June to less than 70 dollars last week.

There are multiple reasons for the decline, including an increase in oil production, specifically in the United States; a fall in the global demand for oil due to a slow down of the world economy; and a positive fallout from conservation efforts. As the New York Times pointed out: “We simply don’t burn as much energy as we did a few years ago to achieve the same amount of mileage, heat or manufacturing production.” There are also geopolitical reasons for the continued decline in oil prices because Saudi Arabia, one of the world’s largest producers, has refused to take any action to stop the fall.

The heaviest toll will be on Nigeria, the largest economy in Africa which depends on crude oil for about 80 percent of its revenues, according to the Wall Street Journal. The country’s currency, the naira, has declined about 15 percent since the beginning of the fall in oil prices.