Oil prices dipped below $45 a barrel today in the United States, the lowest price per barrel in the country in nearly six years.
While the numbers might feel good at the pump, not everyone is celebrating.
Phil Flynn, energy market analyst at Price Futures Group, tells Here & Now’s Jeremy Hobson the decline in prices is not a result greater oil production, but because the price is being manipulated by the “the big players” in the OPEC cartel — who are continuing to flood the market with oil even as prices tumble.
“They are basically coming out and saying they want to target the U.S. shale producers,” he said. “They’ve been taking their market share away from them, and the only way the Saudis and the United Arab Emirates think they are going to get it back, is to basically beat the U.S. energy producers into submission.”
Flynn says the ploy could have major negative consequences for the early recovery in the U.S. economy.
“If [prices] were falling just because the U.S. was producing more oil — which they were previously to this big price collapse — that would have been a good thing,” Flynn said.”That would have been a boost to the U.S. economy. But because this market is being manipulated lower, in part by the OPEC cartel, it’s causing a lot of pain.
“Capital expenditures in the energy industry are going to be cut dramatically. Jobs in the U.S. energy industry are going to be cut. And people have to realize that the U.S. energy industry has been one of the strong parts of the U.S. economy.”
Flynn says if the energy industry takes a hit, it could lead to job losses in other industries. Additionally, Flynn says the drop in oil prices is “killing” short term investment in alternative energy.
“There’s been a lot of banks that have lent the energy industry a lot of money, a lot of these alternative energy industries a lot of money. They are going to think twice before they lend money in the future,” Flynn said.
Guest
- Phil Flynn, energy market analyst at Price Futures Group. He tweets @EnergyPhilFlynn.
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