The drop in the price of oil - good or a bad thing?

Posted by Charlie Johnston

For the first time in a number of years the price of crude has dropped below $90 a barrel. Is this a good or bad thing for companies? Certainly if you are a small  E&P business who has priced projects at $100 a barrel then it means a tightening of the purse strings. For the upstream industry the glut of crude on the market has depressed the price. The US is now a bigger producer of crude then the Russians and the Saudis. This makes marginal fields very expensive to develop and in turn has a big impact on the supply chain. Alot of the people I speak to are very cautious about 2015 and see it at best as a flat year, unless you are linked to the US.

On the flip side,  the price of fuel has come down significantly which gives people more money in their pockets. If this is sustained this will have a positve impact on other clients as the cost of distribution and production could well be reduced. In turn this could lead to a period of continual growth and ultimately more jobs being created. 



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