The cost of crude oil dropped over 32 percent last month, the biggest one-month decline on record since 1983.Although lower oil prices will likely translate into savings for consumers on expenses such as gas and groceries, the drop may be a bellwether of bad economic news. “Oil prices continue to drop as a direct relationship between a weak global economy and demand," Mark Williams, a risk management expert and finance professor at Boston University, tells MarketWatch.
Experts suggest that lower demand in Asia may exacerbate the effects of stagnant or declining growth that are already being felt in the US. In addition, the decisions the OPEC makes about whether or not to decrease production is another factor that could cause prices to change.
"Should they become more aggressive in supply quotes, how will this impact the economy? In particular, the global economy is vulnerable and such OPEC-imposed quota restriction could push the economy in even a deeper recession, further pushing down oil prices," Williams continues.
One way, however, to decrease the fluctuations in oil prices and supply would be to develop more alternative fuel sources. As long as consumers are reliant on oil for necessities such as gas and home heating oil, they also remain subject to the market’s ongoing ups and downs.
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--Bridget O'Sullivan
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