The value of oil at the world's markets keeps falling. Thus, one barrel of North Sea crude oil, which serves an example for forming the price of a Russian brand Urals, has reached the price point that is the lowest for last 7 years. Only some 15 cents was left to the eleven-year minimal point. Consequently, January supplies of Brent are traded at 36.33 for a nominal volume. As a result, the value of Russian oil has reached 35 dollars. As informed by the British agency “Reuters”, if the price of North Sea brand drops even lower, then oil from the RF will appear at the level, recorded 11 years ago.
36 dollars is a critical price for Russian budget, which rested on the forecast supposing that next year liquid hydrocarbons will cost about 50 dollars. One half of incomings to the Russian budget is known to be provided by oil-producing sector; at the same time the British resource informs that cheap oil is very beneficial to the West. This will also have positive impact on Chinese economy, which currently is the largest consumer of crude oil. As a result, the world’s GDP will grow.
Such opinion is adhered to by a number of American experts in the sphere of economy.
It is informed that price drop of oil has been brought about by increase of liquid hydrocarbons recovery from non-traditional sources. What is more, consumption of this fossil fuel has dropped to some extent. Oil price is also influenced by strengthening of American currency and an OPEC decision to refuse from supporting a certain price range. At the same time, many experts suppose that higher supply at the world market is the main reason. They assure that similar tendencies were registered at the world’s energy market in mid 80s of the last century. “Then price drop was caused by considerable buildup of export from non-OPEC countries,” highlight analysts of a broker company CFD 1000.
Consequently, representatives of the World Bank indicate that decline of oil price by 45 percent will lead to growth of planetary GDP by 0.7 percent in next several years. Besides, global inflation will decline on average by 1 percent.
This means that for countries that import energy resources, drop of quotations provides growth of GDP, decline of inflation, and stabilizes the balance of outer trade and budget. Apart from this, income of many companies is growing, which can have an effect identical to lowering of fiscal charges. As a result, agricultural production, for example, can drop by 10 percent, which, in its turn, can lead to price drop of foodstuffs. Therefore, marginal population of Western countries will get slightly better. In other words, the profit lost by oil-producing companies will get to enterprises that use energy resources.
The West Gets Dividends from Cheapening Oil
According to the experts of International Monetary Fund, taking into consideration drop of retail prices due to cheapening oil, world economy will increase by a half percent. At the same time, they admit that problems arising in economies of certain countries will neutralize this effect. Besides, some poorest countries can end up without help, previously provided to them by certain oil-producing countries. Apart from this, the number of risks in geopolitical sphere is increasing.
Owing to the fact that oil price at the world market keeps falling, next year national GDP of the United States will increase by 1.25 percent. As a result, growth of economy of the European Union will amount to about 1 percent in the next 2 years.
The next year’s budget of the Russian Federation was written, basing on assumption that the annual average price of oil will amount to 50 dollars. At this point the weighted average of the price of North Sea crude oil amounts to 55 dollars.
One way or another, many official American institutions suppose that next year oil will rise in price. According to the forecast, published the Ministry of Fuel and Energy of the United States, next year the average price of North Sea brand may amount to 56 dollars. The basic forecast of Russian Ministry of Fuel and Energy predicts that next year oil will cost 50 dollars for a basic volume.
According to Dahl dictionary, the expression “one man's meat is another man's poison” has appeared because of one case.
It states that once a young doctor came on a visit to a sick Russian boy from the family of a craftsman. In the course of examination he came to the conclusion that the patient was hopeless. The child’s mother asked to let him eat anything that the child could wish for. As a result, she decided to please the child with stewed sourcrout and pork. After this the child got better very quickly. This surprised the doctor. Soon after this case the doctor was called to a child from a German family. A it turned out, his sickness was the same as that of the Russian boy. The doctor advised the relatives to give the patient the verified remedy – stewed sourcrout and greasy pork. One day later the German boy died of the disease. The doctor wrote about this in his diary, giving a remarque: “stewed sourcrout is treatment for a Russian, and certain death for a German”. This expression became particularly popular in Russian literature of the second half of the 19th century.
