The website that tracks the daily prices for the two main types of crude oil consumed in the United States is saying that the price of WTI is now at $59.95 per barrel. As many readers will know, crude oil is priced in terms of 42-gallon barrels, and the main domestic price standard is for West Texas Intermediate (WTI), a type otherwise known as “light, sweet” crude oil. An alternate standard is known as Brent Crude, which is the average price of oil pumped out of the fifteen oil fields in the North Sea. The price of Brent Crude is typically a bit higher than WTI, as the price of extraction is higher for undersea deposits.
I posted before, HERE, about the problems that falling crude oil prices pose for fracking producers, and on the day of the post (October 10th) the WTI price was about $87/barrel. At today’s $59.95/barrel, the per-gallon price of WTI crude is $1.43, and we’re now seeing $2.53 at the pump. There are almost no fracking operations in the United States that can produce crude for $60/barrel, not even close.
The ramifications of this price drop will be many, and worldwide. Some are writing that the implications for revenue to the Russian government may imperil the Putin regime.
Keith Naughton joins the fray with a piece at the Daily Caller about the effects on the already-wobbly Venezuelan government. Writes Naughton:
For over 15 years Hugo Chavez and his successor Nicolas Maduro have pursued absurd socialist economic policies liberally mixed with heavy-handed repression, and an anti-American foreign policy. Private property has been expropriated. Political opponents have been harassed and jailed. The crime rate is soared. Essential items have disappeared from store shelves. Maduro himself flat-out stole the last presidential election (of course the leftist leaders in Latin America just shrugged it off — showing yet again that the left only likes democracy when they win).
Now Venezuela is at the end of its financial rope. Tens of billions of dollars in oil revenue have been wasted away and now that the price of oil has cratered, the country’s fiscal deficit is unsustainable. Maduro is cutting spending, unloading debt at cut-rate prices, and arresting his political opponents. Tension is rising between the armed forces and the Maduro’s Chavista paramilitary thugs.
The article goes on to list five ways in which a collapse of the Venezuelan economy and government would impact the United States and its allies. Read the full article, HERE, to get the details of the five ways, and what the Obama administration is planning to do about the potential crisis.