10 potential global problems posed by the plunging price of crude oil!

By | December 9, 2014

In an article this morning, ‘Is there a downside to plunging oil prices?‘, we looked at the potential impact the price drop could have on derivatives, high yield debt and geopolitics!

I have since read an article that expands my list of three issues to a discussion of ten areas of the economy that have the potential to be impacted.

The list is below along with a link at the end to the article that expands and discusses each one more thoroughly.

  1. If the price of oil is too low, it will simply be left in the ground.
  2. The drop in oil prices is already having an impact on shale extraction and offshore drilling.
  3. Shale operations have a huge impact on US employment.
  4. Low oil prices tend to cause debt defaults that have wide ranging consequences. If defaults become widespread, they could affect bank deposits and international trade.
  5. Low oil prices can lead to collapses of oil exporters, and loss of virtually all of the oil they export.
  6. The benefits to consumers of a drop in oil prices are likely to be much smaller than the adverse impact on consumers of an oil price rise.
  7. Hoped for crude and LNG sales abroad are likely to disappear, with low oil prices.
  8. Hoped-for increases in renewables will become more difficult, if oil prices are low.
  9. A major drop in oil prices tends to lead to deflation, and because of this, difficulty in repaying debts.
  10. The drop in oil prices seems to reflect a basic underlying problem: the world is reaching the limits of its debt expansion.

For a more in-depth discussion of each, please visit Econmatters.com here.

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Michael Haltman, President of Hallmark Abstract Service, New York.

HAS is a provider of title insurance in New York State for residential and commercial real estate transactions specializing in the areas of New York City, Long Island and Westchester.

For anyone either buying a property or refinancing, remember that although your attorney will likely recommend a title insurance provider, you always have the right to choose your own title company (click here to learn more)!

If you have any questions you can reach Michael by email at mhaltman@hallmarkabstractllc.com.

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