Economic Article Analysis

Question: The fluctuation in the price of oil has several impacts on the economic stability of a country. Explain? Answer: Introduction The fluctuation in the price of oil has several impacts on the economic stability of a country. It can be seen that in the recent years, the price of crude oil has fallen tremendously that has affected the global oil industry. The impact of the fall in price of crude oil can be mostly seen on the oil producing countries. The fall in price of oil leads to economic downturn and increase expenditure of the government. Along with that, it is important to note that the government plays an important role in controlling the oil price in the domestic market. The paper has been developed to analyze the article that has been chosen for preparing the main report. A proper analysis of the article is provided with discussion for further understanding. Analysis of the Article The article written by Soh (2016) shows that the recent price slump in the global oil prices has certainly benefited Singapores consumers more than the industries. The drop down of crude oil prices has brought relief to the common public of Singapore as the electricity bills, and cost of petrol have been fell about 15% and 5.5% respectively (Soh, 2016). Meanwhile, in a previous couple of years since 2014, the crude prices have seemed a price slump by 48%. There are some fundamental reasons behind the relatively smaller proportion of drop down of electricity prices in Singapore (The Straits Times, 2015). Primarily, 95% of electricity produced in Singapore has relied on the natural gas prices. In the case of discussing the impact of falling oil prices in refinery and petrochemical industry, pump prices have hit six-year lows (Lim, 2016). The petrochemical industry and refining businesses have not seemed to be benefited to a larger extent due to the fall in crude prices as slumping oil prices have slowed the growth minimising the profit outlook. On the other hand, oil-intensive manufacturers in Singapore have been benefited through cut off in the fuel surcharges enjoying savings in fuel price (Cheon and Urpelainen, 2012). As far as transport and logistics businesses are concerned, the slump in crude oil prices can be seen as the most suitable business event. Due to lower crude prices, the transportation business can secure maximum profitability even after decreasing the cost of services (Elliott, 2016). Discussion Due to the rise in crude oil inventories and global economic slowdown, the crude oil prices have slipped down to nearly US$ 30 a barrel earlier in the current year. The growing pressure in crude oil has fuelled new difficulties for the large offshore and marine sector of Singapore. According to the economic analysts, the geopolitical tensions have been a significant worry for the global economy. Hence, due to the falling oil prices, oil rigs, offshore and marine, oil drilling businesses and oil suppliers in the Singapore market have suffered massive losses (Liao and Suen, 2016). The sudden drop down in prices has limited the oil production in Singapore as the cost of output and profitability margins have been the major issues. The sustainable decline in the crude oil prices has forced the oil drilling businesses to reduce the exploration and oil production to a larger extent. Hence, the article provides a proper understanding of the facts that are occurring in the Singapore economy in the recent years. The articles relates to the economic subjects that are taught in class such as economic downturn due to the fall of price of the oil. Furthermore, the article discusses certain policies that are implemented by the government of Singapore to overcome the challenges going on in the Singapore oil industry. Conclusion Due to the slump in the oil prices, a rare economic incident has occurred to Singapore economy as Singapore has seen deflation for the first time in last five years. Incredibly, the prices of the products have been fallen in a significant way creating relief for the public of Singapore. On the other flip, the downtrend of oil prices has created an adverse impact on the real estate market as the property market is facing significant headwinds. The beneficiary from the falling oil prices is quite limited as merely the consumers and oil-intensive businesses are the leading gainers. Meanwhile, oil-related business enterprises such as marine organisations and oil-rig building companies have observed reverse in the business environment seeing orders reduced. References Cheon, A. and Urpelainen, J. (2012). Oil prices and energy technology innovation: An empirical analysis.Global Environmental Change, 22(2), pp.407-417. Liao, H. and Suen, Y. (2016). Dating Breaks for Global Crude Oil Prices and Their Volatility: A Possible Price Band for Global Crude Prices.Energy Studies Review, 14(2). Lim, L. (2016).Little cheer for Singapores economy despite lower oil prices: Analysts. Soh, A. (2016).Low oil prices: Consumers benefited more than industries last year. [online] The Business Times. The Straits Times. (2015).Oil price rout: How falling oil prices impact the Singapore economy, businesses and consumers.