Commuters will have noticed the difference at the pumps, as global oil prices have fallen significantly in recent weeks. Although the reductions are significantly diluted by VAT and duty, it is reported that oil stabilising at 70 USD per barrel in 2015 could result in savings of €120/year, and that’s before heating oil cost savings are accounted for.
Brent Crude Oil is the name given to the lightweight, low sulphur oil produced in the North Sea, and serves as a major benchmark price for purchases of oil worldwide. The price has dropped from $80 to around $60 per barrel in the past month, and that’s down from $115 in June. Weak economic activity, increasing efficiency, political turmoil, increased production in the USA and decisions of Saudi Arabia and it’s oil producing neighbours not to curb production are all factors that have led to the decline.
Price falls like this have more knock-on effects on production. Extraction from North American shale and Canadian sands is expensive (up to $100/barrel to break even), and hence less favourable during such times. On the other hand, it costs just $5-6 to extract oil from the extensive, shallow fields in Saudi Arabia.
How are the falling oil prices affecting you? Will it stay this way?