Cheap Oil: Good For Manufacturers, Bad For Many Economies

Oil prices dipped below $85 a barrel this week.

Cheap Oil: Good For Manufacturers, Bad For Many Economies
Getty Images / Justin Sullivan

The price of oil has been plummeting. And whether you consider that a good thing, depends on who you are. 

Drivers certainly have benefitted from the drop, as Council on Foreign Relations analyst Michael Levi explained to NPR. (Video via WTFS)

LEVI: "For every $20 decline in the price of a barrel of oil, you should expect about a 50 cent decline in the price of a gallon of gasoline. And that is what we've seen."

It's also good news for manufacturers, as Bloomberg analyst Rob Barnett told C-SPAN. (Video via PBS)

BARNETT: "Generally speaking energy is an input to manufacturing, so lower prices, again, is a very good thing."

But not everyone shares that sentiment.

Russian President Vladimir Putin warned cheap oil prices, which dipped below $84 a barrel this week, could collapse the world economy. (Video via RT)

The Russian government, which relies on energy revenues for more than half of its budget, is particularly vulnerable to the dip in price.

Though maybe not as vulnerable as Venezuela, whose oil-dependent government was already suffering from a recession, high inflation, and civil unrest. (Video via The Guardian)

The country's foreign ministry requested an emergency meeting of OPEC nations to address the falling prices.

But officials from Saudi Arabia, OPEC's largest member, are reportedly willing to accept the lower prices to protect their market share, as well as to challenge the onslaught of American produced oil.

The boom in American oil is largely due to hydraulic fracturing, a process that is more expensive than traditional oil production, making it more susceptible to dips in oil prices.

But it's unlikely the low prices will squeeze the margins of U.S. oil production, however. Some analysts believe the industry could remain profitable even at $60 a barrel.

This video includes images from Getty Images.