Eurocontrol Technics Ord EUCTF

Low oil price – A plus or a minus?

[kidl2]

Many  small and not so small countries rely to a  large degree on oil revenue to keep their economies afloat. Many of these countries also happen to rank very high on the corruption scale. An “unfortunate” but manageable situation in a high oil price environment since there was enough revenue to keep the population quiet, the government in power and the crooks happy. Nigeria is a great example with an “accepted”  government and industry sanctioned, even contractually agreed up  ” loss rate ” between 10 and 20%.
 
What are the options for these countries?
Cutting government spending? Shaving meat off an already bare bone is sort of tricky especially for governments intending to stay in power.
Increasing production and thus revenue? Equally tricky in light of capex cutbacks.
Increasing government debt? If Greece can do it ... :-)
 
Must be a really tough job selling Petromark these days ...

[fortfry]

One thing about oil that may be alittle bit of a plus for the longs or countries that produce oil is the fact that it is priced in US dollars which is currently a cuurency that is up for example its a lot higher in Canadian dollars and oil is the most important commodity in the world and when the price does come down it increases demand so new oil needs to be found and it needs to be produced as

[lscfa]

You have not considered that fuel marking sales may be inversely correlated to oil prices. As oil prices decline governments need every petrodollar they can so the incentive to stop the loss of petro tax dollars is heightened.