Updated: Oct 26, 2020
By Douglas Rivelli
For those who have not seen it at their local gas pump yet, prices of oil in the United States are dropping. While it may seem like good news at first, there are more serious repercussions for this.
Saudi Arabia is a huge world exporter of oil, especially to the U.S., so anything that affects their supply will end up back in our backyard. Now, Saudi Arabia has declared a price war due to the breakdown of the bond between the OPEC cartel, which is headed by Saudi Arabia and Russia.
The issue started when Saudi Arabia started to raise the amount of oil they can export, but Russia’s leader, Vladimir Putin, found that it would be detrimental to the pact and tried to put an end to their plans. However, Saudi Arabia has heeded no warnings and continues to sell oil on their own terms.
Now, the two countries are trying to work out a deal between their own ongoing battle. While it may seem like this war can benefit us, think twice. Because of this war, there is incredible instability among the big oil companies. This war could easily hurt the U.S. as a whole because it will cause the price of oil to fall so low that big oil companies are more at risk to lose incredible amounts of business, making it hard for them to keep afloat.
It may seem like there is a benefit in all of this, and for the consumer, there is. Prices of oil will go down and stay down for quite a while. However, the overarching effects that it will have on the global economy will be hard to repair.