"OPEC Drills a Dry Hole," NewsWeek, January 28, 1985. p. 325

 

 

Basic Argument:

 

            Decreasing oil prices are causing significant financial problems in some countries and keeping inflation in check for other countries. 

 

Summary:

 

            The continual and sharp decrease in oil prices has lead several producers to a financial downfall.  While the drop in oil prices helps keep inflation in check and stimulate global economic recovery, revenues in countries such as Nigeria, Saudi Arabia, and even Mexico have dramatically fallen.  For nearly all of these countries oil, is the main export, and the drop in oil prices is causing much of the financial problems.  The countries simply have no where else to turn for revenues.  The banking industry is hesitant to lend out money to any of these countries, which makes recovery even harder for these already struggling countries.  Of all the countries hurt in this “crisis,” the hardest hit is Nigeria.  Their government has attempted to make drastic changes in the economy to reconcile the economic troubles that allowed a military coup in 1984.  The war between Iraq and Iran has also had an effect on oil producing countries.  While at war, most of their man-power and money go towards the war effort limiting the amount of oil that can be exported.  After the war the production of oil in both countries will rise considerably causing the oil prices to drop even further.  Even OPEC giant, Saudi Arabia, has felt the effects.  Saudi Arabia’s wealth is not as immense as it once was.  They have also cut back on several “public-works projects” as a means of making up for lost revenues.  Many experts agree that oil prices will continue to fall though some argue over how steeply.  It seems that the only thing everyone one agrees on is that oil market will remain unstable.