Oil prices’ decrease: political war wearing economic mask

By: Joseph Farah

JANUARY 27, 2015 (REFERRING TO THE NATIONAL NEWS AGENCY – LEBANON) What level would the oil price drop at in international markets? Would the price of a barrel of oil reach 15 or 20 dollars? And what are the benefits of lower oil prices on Lebanon as a consumer country?

The first positive impact is the falling price of gasoline canister from 39.000 to 22.000 L.L. The second is the decline in Electricite Du Liban’s deficit at about USD 600 million in favor of the Treasury. However, the only negative factor is that the prices of commodities and food products will not be affected the same way by the falling oil prices.

According to the financial and economic expert Walid Abou Sleiman, “the reasons behind oil prices’ decline are economic and financial on the one hand, and political on the other hand as the United States had, in the past, led ‘failed’ political and diplomatic wars against the opposite axis represented by China, Russia and Iran.”

“Then, the United States announced the start of exploration of shale gas to ensure self-sufficiency. Therefore, the oil price decline is positive for this country which was able to record a 5% growth accompanied by a reduction in unemployment rates,” he explained, noting that “the decline in oil prices, on the other hand, led to economic stagnation and rising unemployment in Russia.”

“Most of Russia’s imports were based on oil, and the 2015 budget predicted the price to be 100 US dollars per barrel, while it dropped to 45 dollars.”

“Iran, for its part, considered that the fuel price fall is a war against oil producing countries. And now, in witness of these prices, the deficit in Iran will be big, which would lead to an increase in public debt and an economic recession,” Abou Sleiman went on.

In his opinion, Russia will no longer be able to fund the cold war represented by the ongoing war in Syria, not to mention the influence of this situation on the ongoing negotiations between USA and Iran over the Iranian nuclear program.

Pertaining to the impact of lower oil prices on Lebanon, Abou Sleiman said “we are an oil importer and consumer country and the benefits are huge on consumption and production as 60% of the consumer products rely first on oil. The industrial sector as a whole relies on fuel, which means that the cost will decrease and the treasury will benefit significantly.”

Owners of gas stations Syndicate member and general manager of the company “Brax Petroleum”, George Brax said, for his part, that “the fall in the price of oil barrels in international markets has not led to increased demand because of the slow growth in global economy, adding that the latest report of the International Monetary Fund predicts a continued decline in the world economy growth, based on the stagnant growth in the euro zone and the weak economic growth in China.”

“The report shows that the oil price decline would not cause a change in the global economy, which means that the markets will continue their journey towards a further long-term reduction,” he argued.

Regarding Lebanon’s situation, Brax hoped the Ministry of Energy would opt for oil prices’ decline without imposing new taxes, adding that it is the consumers’ right to enjoy this decline, as they had silently paid very expensive oil prices before.

“If oil prices continue to drop in the world, we can predict that the barrel of gasoline would reach 17000 L.L. provided that taxes do not increase and prices do not get stabilized,” he said.

Brax concluded that the decline in oil prices will have a positive impact on the national economy, the public treasury and the liquidity.

SOURCE: NATIONAL NEWS AGENCY-LEBANON