I will explain why and how this affects us as consumers and how the drop is having affects worldwide. c. Establish Credibility (Ethos)- Now, by no means, am I an expert in the field but as someone who has experienced the bad and now the good when it comes to gas prices, curiosity has had me complete extensive research on this topic, in which now I feel confident in informing you on my findings. d. Preview Main Points- So next time you are at the gas station and you notice gas prices around the 2 dollar mark you’ll understand: 1 . Why prices have actually dropped 2. How this affects us as American consumers 3.
How this has an affect globally II. Body a. First Point- When it comes to prices, supply and demand always dictates he changes we see in the market. i. Subpoint- As prices of crude oil soared in the early to mid-2000s, it became clear that the United States had to start producing and drilling more and more of their own oil, especially in hard to extract areas like North Dakota. There wasnt enough oil production to keep up with the global growth, so the demand was high and the supply was low, this caused the high prices 1 . Since 2004, the United States has produced an extra 3. million barrels Of Oil per day. This was Off set for a long time with tensions in the middle east slowing production but in the middle of 2014, hese conflicts in the east weren’t as much as a concern and slowly the supply has continued to grow. According to Brad Plumer, senior editor at Voxr the Asia and Europe markets, specifically China and Germany have slowed down demand. That combination of weaker-than-expected demand and steadily rising supply caused oil prices to start dropping from their June peak of $115 per barrel down to around $80 per barrel by mid-November to around $50 currently.
So will slower global economies not consuming as much oil and the supply still there, we now have seen these prices drop. b. Second Point- Now hat we know why prices have fallen, as consumers, we should understand the effects this has on us in America. i. Subpoint- This might seem obvious but we have more money in our pockets. According to an estimate prepared for The Wall Street Journal by ClearView Energy Partner, “If crude-oil prices remain at $50 a barrel, it would result in per capita savings of roughly $575”or nearly $1 ,325 per U.
S. household”on gas over the coming year relative to last year’s spending”. Almost an extra $600 is lot of money and its money we can put back in to our economy. ii. In depth analysis- Earlier I entioned that the average for gas is over a dollar lower. Brett Ryan, U. S. economist at Deutsche Bank says that for “Every One-cent drop in gas prices [it] means a $1 billion annual decline in energy spending by Americans iii. According to date from the Federal Reserve, credit card balances declined at a pace they hadn’t seen in over a year.
Not to mention retail and restaurants saw a growth late in the year they hadnt seen in 7 years. It’s clear that the extra money is definitely benefiting us consumers. TRANSTION: This is where it gets tricky, as it clearly benefits us, other countries around the world are eing hurt by these prices. c. Third Point- Not only do gas prices affect us here in America but it also has a global effect everywhere else. i. Subpoint- Countries that depend on the export of oil as there economy are all suffering greatly right now. Countries like Russia, Venezuela and Iran all depend on oil. . Russia for example, depends on 45% of their government budget on revenue from oil. There central bank is in crisis and interest rate just shot up. 2. Venezuela may have to default on all its debt Venezuela already was running low on hard currency. When prices dropped o $100, the country protested and thought that was a bad sign for the economy. “Venezuela’s oil prices have been high for several years now, and the country is still struggling to pay its debt at those prices,” said Russ Dallen, a partner at brokerage firm Caracas Capital Markets.