March 28, 2024

Here at HufNews we love cheap oil because it gives us very cheap gas. but today, oil prices crashed and that is really bad. Yes, gas will get even cheaper but -40.32 dollars a barrel is just plain terrible.

For a start, american drillers and frackers cannot even survive $10, they were having a hard time at $30. $10 is bankruptcy. they are even running out of storage space. they will need massive government support and even then, not all will make it. The oil crash is a direct threat to america’s highly successful energy industry.

Russia and Saoudi Arabia are the the biggest losers. their entire economy rests on oil. They are a petro states. even vladimir putin has to worry when his country is locked down and the main filler of its economy is collapsing. You could say the same thing about any country that relies heavily on oil, most OPEC members are in deep deep trouble. even saudi arabia is looking at a ruinous decline in revenues.

China in the other hand is a winner. China has to import almost all of its oil and at these price levels are good for her, china can supply juice to its factories, that’s a competitive advantage, especially since those factories are now reopening while the rest of the world is at a standstill. We may be unhappy with beijing’s handling of the virus but they have been handed an economic advantage, maybe that’s why they chose to arrest democracy advocates in hong kong over the weekend.

The oil crash makes them look stronger, there is no way round all of this. The CoronaVirus Covid-19 has cut worldwide demand for oil by an estimated 30 million barrels of oil a day. The producers can cut production as much as they like but the price doesn’t go back up until the world gets back to work and we can’t enjoy cheap gas until we start driving again.

That won’t happen until we get back to the daily commute, taking vacations and visiting friends and relatives. The oil crash is a shocking demonstration of just how badly the CronoaVirus hit us all.

M.Ben for HufNews

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