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Output to Increase due to Low Prices of Oil

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Published on : Feb 17, 2015

Economists at PwC have expressed that major global oil importers of the world such as the U.S., the Euro zone, and Japan are the main beneficiaries of the plunging oil prices. But the effects of the same may not be witnessed evenly in each and every economic sector. As per the assumptions, the price of oil per barrel is anticipated to be somewhere around US$55. This will be almost 50% lesser than what it was in 2014. 

Few senior economists have stated that some of the major corporate giants may not get to experience the long term benefits of this immediately. This is so because there are many such corporations that have already entered into hedge contracts of long term nature with their respective suppliers. It is also predicted that several households may have to end up waiting for quite some time in order to witness the positive impact of the plunging oil prices. 

As per the analysis of the PwC economists, by 2015, the industrial and transport sectors of the U.S. will witness a benefit worth US$300 billion. The falling operating costs may lead to a rise in the levels of production. This will eventually lower the prices and as a result stimulate consumption. Euro zone’s transport sector is expected to be a big winner in terms of benefit that is close to US$65 billion. However, the entire impact will take more time to be witnessed. Also, it is expected that higher benefit will be witnessed by Greece as against Germany because of falling oil prices. The main factor behind this is that Greece exhibits lower degree of energy efficiency.