When the world gets closer.

We help you see farther.

Sign up to our expressly international daily newsletter.

Enjoy unlimited access to quality journalism.

Limited time offer

Get your 30-day free trial!
CLARIN

Winners And Losers In The New Age Of Oil Politics

Falling crude prices spell trouble for oil-dependent economies like Venezuela and Russia, with political consequences to follow. Meanwhile, the world's two biggest economies may fare well.

Venezuelan President Nicola Maduro waving at an oil tanker
Venezuelan President Nicola Maduro waving at an oil tanker
Mariano Caucino

-OpEd-

BUENOS AIRES — The price of crude oil has lost a quarter of its value since June, as oil looks set to again become a central factor in the global economy. Prices on Monday went below the $80-per-barrel mark, a two-year low, after peaking at $103 in the middle of 2014.

There appear to be three structural reasons for this drop: the United States moving closer to its goal of energy self-sufficiency, reduced growth rates in China, and persistent economic stagnation in Europe. We can now add to this the decision this week by Saudi Arabia, the world's largest oil producer, to lower prices on crude sold to the U.S.

But beyond the debate over the causes, the reality is that the current decline in crude prices is threatening the public budgets of several countries whose economies are decisively linked to revenues from the energy sector. It also happens to be that several of these nations are also involved in ongoing conflicts: Iraq, Syria, Russia and in our region, Venezuela.

History's lessons

The latter may be the country most affected by the new state of affairs, which has prompted the government of President Nicolás Maduro to call an urgent meeting of OPEC. The pressing economic reality for Caracas is that Venezuela depends on oil for $96 of every $100 in public revenues. Angola, Russia and Iran are also affected by the drop, and respectively need to sell crude oil at $98, $105 and $130 a barrel to balance their budgets.

[rebelmouse-image 27088312 alt="""" original_size="1024x768" expand=1]

An oil well in Caracas, Venezuela — Photo: Beatrice Murch

On the other hand, falling energy prices naturally benefit transport firms, farming and manufacting sectors that see their operation costs reduced. The United States appears to be entering a period of abundant energy resources, with domestic oil production increasing 56% in the last 10 years. Emerging giants China and India could benefit in turn, even if indirectly: In China's case, dependence on oil imports weighs on its economic growth.

Put simply, it appears that the price of oil will play the kind of central role in the dynamics of the world economy that it has in the past. In 1973, the shock that followed the Arab-Israeli conflict quadrupled the price of oil within months, which irreparably changed the politics and economy of the following decade. In the late 1990s, a barrel cost barely $20. Eight years later, it was at $145, a huge leap that explains the displays of power by states like Venezuela, Iran and Russia.

Yet not for the first time, policies based on the the sale of natural resources are showing the inevitable limits of reality. Such is the fate that the rules of history have imposed on rentier states that fail, or refuse, to diversify their economies.

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

Society

Gun Violence In America: Don't Blame The Victims — That Means Rappers Too

The recent shooting of Takeoff, a rapper, is another sad incident of gun crime in the U.S. But those blaming hip hop culture for contributing to gun violence ignore that rappers themselves are also victims. And the real point is that in today's America, nobody is safe from gun violence.

Gun Violence In America: Don't Blame The Victims — That Means Rappers Too

Fans wait outside State Farm Arena in Atlanta to attend the memorial service for Migos rapper Takeoff on Nov. 11

A.D. Carson

Add the name of Takeoff, a member of the popular rap trio Migos, to the ever-growing list of rappers, recent and past, tragically and violently killed.

The initial reaction to the shooting to death of Takeoff, born Kirsnick Ball, on Nov. 1, was to blame rap music and hip hop culture. People who engaged in this kind of scapegoating argue that the violence and despairing hopelessness in the music are the cause of so many rappers dying.

Keep reading...Show less

You've reached your limit of free articles.

To read the full story, start your free trial today.

Get unlimited access. Cancel anytime.

Exclusive coverage from the world's top sources, in English for the first time.

Insights from the widest range of perspectives, languages and countries.

The latest