For the first time since 2009, the price of United States oil fell below $50 a barrel, and Brent crude (West Texas Intermediate crude) fell to a five-and-a-half year low of $51.12 per barrel. That statistic is in great part due to fracking and a global excess in oil supply, combined with OPEC’s refusal to slow its production.
Investors are reportedly worried that the combination of an excessive supply of oil globally in conjunction with a weak demand — China and some European nations have slowed their once insatiable demand for the liquid gold — could result in a further decrease in prices, according to the BBC. It has also reportedly led to sharp declines in consumer shares of world’s leading energy firms (BP, Exxon Mobil, etc.) over the course of the past few months.
In November of 2014, the United States became the world’s largest producer of petroleum and hit a new record of its highest level of oil exports in 57 years. American oil reserves also topped Saudi Arabia’s and the U.S. now outproduces OPEC. OPEC consists of 12 member countries (Algeria, Angola, Ecuador, Islamic Republic of Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, Venezuela).
The news is also positive for most American oil consumers, with new estimates that revealed the average U.S. household saved approximately $115 in 2014. Consumers also reportedly saved about $14 billion on gasoline in 2014 compared to 2013 and $22 billion compared to 2012.
Adelle Nazarian is on Twitter @AdelleNaz