Tag Archives: petroleum

Endless Plummet? Gas Prices Continue to Drop

Oil prices have hit a record low falling below $60 per barrel. Although for gasoline consumers the drop in prices are accompanied with happy bank accounts, other production sectors and countries are starting to feel the effects.

From oil fields in places like Texas to those in Saudi Arabia and Russia, along with extraction plants and businesses, are being affected by the fall in prices. Countries like Venezuela and Russia, whose economies greatly depend on oil extraction and exportation are some of the hardest hit as they try to maintain production quotas in the face of a saturated market.

“Russia’s rouble went into free-fall in Tuesday trading, falling repeatedly to hit record lows, despite the central bank’s dramatic decision to raise interest rates from 10.5% to 17%,” according to BBC.

Why are oil prices down?

The simple answer is that there is a surplus in the supply of oil, but a decreased demand for oil in the global market. This problem has been perpetuated by the exploration and the energy independence revolution in the United States and Canada. The extraction of shale oil in the United States has boomed and created alternative energy sources that are messing with the natural flow of oil trade (Boston Globe).

 

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China Fever

China, being the worlds most populous nation with a population of 1.4 billion, has all the demand, but none of the supply. On the other hand, Brasil is a country rich in diverse resources. Within the past couple years, this star of Latin America has greatly increased it’s exports to China.

In 1999, total export income was $1.5 billion for Brazil, but in 2010 reached $1.9 billion. Brazil has helped the Asian giant out in everything from soybean and wheat exports to clean water production.

The relations however are not a one way street. China has begun to heavily invest in the technological sector of Brasil as well as other areas. Chinese telecom companies have reached out to spark innovation and production in Brasil. According to the International Energy Agency, between 2005 and 2012 Brazil had received about $18.3 billion worth of investment from China.

Of course the substance that is almost valued more than water these days has not been left out either, Brasilian petroleum company, Petrobras, has teamed up with Chinese Sinopec Petrochemical Corporation to enjoy ventured oil exploration and the creation of a pipeline extending from Southern to Northern Brasil.

The main concerns of these relations are if China will flop on its deals and also if Brasil will simply become and stay a farm, forest and mine based cultivation country. The reality is that Brasil is so much more than that. However with Brasilian political infrastructure, problems such as high interest rates and an exaggerated exchange rate are just some of the things that make progression difficult.

These are some of the reasons why the Brasilian elections are so important. If Brasil is to be the star of Latin America (or maintain its place as the most advanced), there are going to need to be heavy reforms that meet the demands of the country. Brasil, along with others, faces a pinnacle point of being able to manage and control its own country in the wake of great demand by the just implementation of a steady government, or will it crumble and just become a harvest country?