While the low cost of oil has been bad news for American fossil fuel producers, consumers and businesses have benefited from reduced costs at the pump. This week, the cost per barrel briefly dipped below $50, a benchmark analysts had previously projected as the most dramatic scenario.
On Monday, the price dropped to $49.95 but rebounded to $50.40 in the same day. While the sub-$50 figure was short-lived, it remains uncertain how long the dismal prices will last. Last year, the cost hemorrhaged when OPEC resolved not to cap production despite falling prices, a move that was interpreted by some as an effort to torpedo competitors in the United States and Russia. With massive reserves of oil and capital, OPEC bosses could conceivably drown the market with surplus supply for months to come.
The Associated Press reports that OPEC is unlikely to continue exporting at the current high rates through the first quarter of 2015, though there's still no production cap on the horizon. In the meantime, domestic energy markets remain vulnerable. Ed Morse, an analyst at Citigroup, projected months ago that the oil price in 2015 was likely to hover around $80 per barrel, and has since adjusted his forecast to $63.
The dip below $50 represents an almost six-year low for the oil industry. With severely contracted resources, the Associated Press says major fuel producers around the world have cut exploration and development budgets to get through the tough times. Some industries have benefited from the low cost of oil, particularly airlines, shipping companies and others that depend on transportation and gasoline. For small machine shops and large manufacturing operations, oil prices are a factor that experts will continue to watch in 2015.