The Great Plunge in Oil Prices : Causes, Consequences, and Policy Responses
This note combines and distills existing and new research to inform discussion on the topical policy issue of oil prices. Following four years of relative stability at around $105 per barrel (bbl), oil prices have declined sharply since June 2014 a...
| Main Authors: | , , , |
|---|---|
| Format: | Working Paper |
| Language: | English en_US |
| Published: |
World Bank, Washington, DC
2016
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2015/12/25666189/great-plunge-oil-prices-causes-consequences-policy-responses http://hdl.handle.net/10986/23611 |
| id |
okr-10986-23611 |
|---|---|
| recordtype |
oai_dc |
| repository_type |
Digital Repository |
| institution_category |
Foreign Institution |
| institution |
Digital Repositories |
| building |
World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English en_US |
| topic |
EMPLOYMENT MERCHANDISE CAPITAL MARKETS DURABLE GOODS NUCLEAR REACTORS OIL PRICE PRICE INCREASES OIL EQUIVALENT FOSSIL FUELS OIL MARKETS STOCK QUALITY ENERGY WORLD OIL CONSUMPTION MARKET DEVELOPMENTS DEFLATION OIL SPILLS PRICE FORECASTS ACTIVITIES AVERAGE PRICES OIL OUTPUT OIL SUPPLY CLEAN ENERGY GAS PRICES GASOLINE ENERGY PRODUCTS FAIR OIL PRICE COLLAPSE OIL EXPLORATION PRICING GAS ETHANOL BARRELS PER DAY PRICE PEAK OIL DOMESTIC OIL OIL CONSUMPTION OIL PRODUCTION INFLATION STABLE PRICES OILS LABOR MARKET PETROLEUM OIL PRICES LNG NATURAL GAS PRICES OIL DEMAND LIQUEFACTION AGRICULTURAL COMMODITIES OIL BARREL OIL ENERGY SOURCES SUBSTITUTE PRODUCT RAW MATERIALS PETROLEUM EXPORTING COUNTRIES OIL ACCOUNTS OIL COMPANIES DOMESTIC SUPPLY SURPLUS PRODUCTS OPTIONS OIL PRODUCTS CRUDE OIL PRODUCTION EMERGING MARKET RECOVERABLE RESERVES MARKETS OIL IMPORTS AGRICULTURAL PRICES PRODUCT TAX REVENUES PRICE SUBSIDIES INVENTORIES FUEL DEMAND PRICING POLICIES INVENTORY FUELS FUEL COSTS COMMODITY PRICE TAX POLICIES PRICE CHANGE EXPENDITURE EMERGING MARKETS PRICING MECHANISM ENERGY CONSUMPTION GAS PROJECTS SUBSTITUTE CLIMATE CHANGE VOLATILITY BALANCE OIL PRODUCER MARKET CONDITIONS MERCHANDISE EXPORTS UTILITIES POWER ELECTRICITY PRICE OF OIL PRICE SUPPORT DEMAND AGGREGATE DEMAND PRICE STABILITY PRICE CHANGES FOSSIL FUEL EXPENDITURES OIL EXPORTS PRICE FLUCTUATIONS OIL PRODUCERS FUEL PRICES COST OF ENERGY ENERGY BILLS ENERGY USE CONSUMPTION OF ENERGY MARKET NET OIL NUCLEAR ENERGY ENERGY PRICES COFFEE PRICES ENERGY PRODUCTION CRUDE OIL PRICE NATURAL GAS MARKET SHARE FEEDSTOCK FINANCIAL MARKET SUGARCANE STOCKS OIL EXPORTERS DOMESTIC OIL PRODUCTION INVESTMENT NITROGEN COAL FINANCIAL MARKETS SUPPLY CRUDE OIL FUEL OIL SHOCKS DRILLING PRICES OF ENERGY AVAILABILITY OIL PRICE SPIKE INVESTMENTS DOMESTIC PETROLEUM RENEWABLE ENERGY SUPPLIERS PRICE SPIKES LABOR MARKETS DIESEL COMMODITY PRICES OIL INDUSTRY ENERGY COSTS FOSSIL PRICES APPROACH ELECTRICAL POWER ENERGY |
| spellingShingle |
EMPLOYMENT MERCHANDISE CAPITAL MARKETS DURABLE GOODS NUCLEAR REACTORS OIL PRICE PRICE INCREASES OIL EQUIVALENT FOSSIL FUELS OIL MARKETS STOCK QUALITY ENERGY WORLD OIL CONSUMPTION MARKET DEVELOPMENTS DEFLATION OIL SPILLS PRICE FORECASTS ACTIVITIES AVERAGE PRICES OIL OUTPUT OIL SUPPLY CLEAN ENERGY GAS PRICES GASOLINE ENERGY PRODUCTS FAIR OIL PRICE COLLAPSE OIL EXPLORATION PRICING GAS ETHANOL BARRELS PER DAY PRICE PEAK OIL DOMESTIC OIL OIL CONSUMPTION OIL PRODUCTION INFLATION STABLE PRICES OILS LABOR MARKET PETROLEUM OIL PRICES LNG NATURAL GAS PRICES OIL DEMAND LIQUEFACTION AGRICULTURAL COMMODITIES OIL BARREL OIL ENERGY SOURCES SUBSTITUTE PRODUCT RAW MATERIALS PETROLEUM EXPORTING COUNTRIES OIL ACCOUNTS OIL COMPANIES DOMESTIC SUPPLY SURPLUS PRODUCTS OPTIONS OIL PRODUCTS CRUDE OIL PRODUCTION EMERGING MARKET RECOVERABLE RESERVES MARKETS OIL IMPORTS AGRICULTURAL PRICES PRODUCT TAX REVENUES PRICE SUBSIDIES INVENTORIES FUEL DEMAND PRICING POLICIES INVENTORY FUELS FUEL COSTS COMMODITY PRICE TAX POLICIES PRICE CHANGE EXPENDITURE EMERGING MARKETS PRICING MECHANISM ENERGY CONSUMPTION GAS PROJECTS SUBSTITUTE CLIMATE CHANGE VOLATILITY BALANCE OIL PRODUCER MARKET CONDITIONS MERCHANDISE EXPORTS UTILITIES POWER ELECTRICITY PRICE OF OIL PRICE SUPPORT DEMAND AGGREGATE DEMAND PRICE STABILITY PRICE CHANGES FOSSIL FUEL EXPENDITURES OIL EXPORTS PRICE FLUCTUATIONS OIL PRODUCERS FUEL PRICES COST OF ENERGY ENERGY BILLS ENERGY USE CONSUMPTION OF ENERGY MARKET NET OIL NUCLEAR ENERGY ENERGY PRICES COFFEE PRICES ENERGY PRODUCTION CRUDE OIL PRICE NATURAL GAS MARKET SHARE FEEDSTOCK FINANCIAL MARKET SUGARCANE STOCKS OIL EXPORTERS DOMESTIC OIL PRODUCTION INVESTMENT NITROGEN COAL FINANCIAL MARKETS SUPPLY CRUDE OIL FUEL OIL SHOCKS DRILLING PRICES OF ENERGY AVAILABILITY OIL PRICE SPIKE INVESTMENTS DOMESTIC PETROLEUM RENEWABLE ENERGY SUPPLIERS PRICE SPIKES LABOR MARKETS DIESEL COMMODITY PRICES OIL INDUSTRY ENERGY COSTS FOSSIL PRICES APPROACH ELECTRICAL POWER ENERGY Baffes, John Kose, M. Ayhan Ohnsorge, Franziska Stocker, Marc The Great Plunge in Oil Prices : Causes, Consequences, and Policy Responses |
| relation |
Policy Research Note,PRN/15/01; |
| description |
This note combines and distills existing
and new research to inform discussion on the topical policy
issue of oil prices. Following four years of relative
stability at around $105 per barrel (bbl), oil prices have
declined sharply since June 2014 and are expected to remain
low for a considerable period of time. The drop in prices
likely marks the end of the commodity supercycle that began
in the early 2000s. Since the past episodes of such sharp
declines coincided with substantial fluctuations in activity
and inflation, the causes and consequences of and policy
responses to the recent plunge in oil prices have led to
intensive debates. This paper addresses four questions at
the center of these debates, with particular emphasis on
emerging market and developing economies: 1) How does the
recent decline in oil prices compare with previous episodes?
2) What are the causes of the sharp drop and what is the
outlook for oil price? 3) What are the economic and
financial consequences? 4) What are the main policy
implications? The decline in oil prices will lead to
significant real income shifts from oil exporters to oil
importers, likely resulting in a net positive effect for
global activity over the medium term. However, several
factors could counteract the global growth and inflation
implications of the lower oil prices. These include weak
global demand and limited scope for additional monetary
policy easing in many countries. The disinflationary
implications of falling oil prices may be muted by sharp
adjustments in currencies and effects of taxes, subsidies,
and regulations on prices. Regarding fiscal policy, the loss
in oil revenues for exporters will strain public finances,
while savings among oil importers could help rebuild fiscal
space. Lower oil prices also present a window of opportunity
to implement structural reforms. These include, in
particular, comprehensive and lasting reforms of fuel
subsidies, as well as energy taxes more broadly. |
| format |
Working Paper |
| author |
Baffes, John Kose, M. Ayhan Ohnsorge, Franziska Stocker, Marc |
| author_facet |
Baffes, John Kose, M. Ayhan Ohnsorge, Franziska Stocker, Marc |
| author_sort |
Baffes, John |
| title |
The Great Plunge in Oil Prices : Causes, Consequences, and Policy Responses |
| title_short |
The Great Plunge in Oil Prices : Causes, Consequences, and Policy Responses |
| title_full |
The Great Plunge in Oil Prices : Causes, Consequences, and Policy Responses |
| title_fullStr |
The Great Plunge in Oil Prices : Causes, Consequences, and Policy Responses |
| title_full_unstemmed |
The Great Plunge in Oil Prices : Causes, Consequences, and Policy Responses |
| title_sort |
great plunge in oil prices : causes, consequences, and policy responses |
| publisher |
World Bank, Washington, DC |
| publishDate |
2016 |
| url |
http://documents.worldbank.org/curated/en/2015/12/25666189/great-plunge-oil-prices-causes-consequences-policy-responses http://hdl.handle.net/10986/23611 |
| _version_ |
1764454300726067200 |
| spelling |
okr-10986-236112021-04-23T14:04:16Z The Great Plunge in Oil Prices : Causes, Consequences, and Policy Responses Baffes, John Kose, M. Ayhan Ohnsorge, Franziska Stocker, Marc EMPLOYMENT MERCHANDISE CAPITAL MARKETS DURABLE GOODS NUCLEAR REACTORS OIL PRICE PRICE INCREASES OIL EQUIVALENT FOSSIL FUELS OIL MARKETS STOCK QUALITY ENERGY WORLD OIL CONSUMPTION MARKET DEVELOPMENTS DEFLATION OIL SPILLS PRICE FORECASTS ACTIVITIES AVERAGE PRICES OIL OUTPUT OIL SUPPLY CLEAN ENERGY GAS PRICES GASOLINE ENERGY PRODUCTS FAIR OIL PRICE COLLAPSE OIL EXPLORATION PRICING GAS ETHANOL BARRELS PER DAY PRICE PEAK OIL DOMESTIC OIL OIL CONSUMPTION OIL PRODUCTION INFLATION STABLE PRICES OILS LABOR MARKET PETROLEUM OIL PRICES LNG NATURAL GAS PRICES OIL DEMAND LIQUEFACTION AGRICULTURAL COMMODITIES OIL BARREL OIL ENERGY SOURCES SUBSTITUTE PRODUCT RAW MATERIALS PETROLEUM EXPORTING COUNTRIES OIL ACCOUNTS OIL COMPANIES DOMESTIC SUPPLY SURPLUS PRODUCTS OPTIONS OIL PRODUCTS CRUDE OIL PRODUCTION EMERGING MARKET RECOVERABLE RESERVES MARKETS OIL IMPORTS AGRICULTURAL PRICES PRODUCT TAX REVENUES PRICE SUBSIDIES INVENTORIES FUEL DEMAND PRICING POLICIES INVENTORY FUELS FUEL COSTS COMMODITY PRICE TAX POLICIES PRICE CHANGE EXPENDITURE EMERGING MARKETS PRICING MECHANISM ENERGY CONSUMPTION GAS PROJECTS SUBSTITUTE CLIMATE CHANGE VOLATILITY BALANCE OIL PRODUCER MARKET CONDITIONS MERCHANDISE EXPORTS UTILITIES POWER ELECTRICITY PRICE OF OIL PRICE SUPPORT DEMAND AGGREGATE DEMAND PRICE STABILITY PRICE CHANGES FOSSIL FUEL EXPENDITURES OIL EXPORTS PRICE FLUCTUATIONS OIL PRODUCERS FUEL PRICES COST OF ENERGY ENERGY BILLS ENERGY USE CONSUMPTION OF ENERGY MARKET NET OIL NUCLEAR ENERGY ENERGY PRICES COFFEE PRICES ENERGY PRODUCTION CRUDE OIL PRICE NATURAL GAS MARKET SHARE FEEDSTOCK FINANCIAL MARKET SUGARCANE STOCKS OIL EXPORTERS DOMESTIC OIL PRODUCTION INVESTMENT NITROGEN COAL FINANCIAL MARKETS SUPPLY CRUDE OIL FUEL OIL SHOCKS DRILLING PRICES OF ENERGY AVAILABILITY OIL PRICE SPIKE INVESTMENTS DOMESTIC PETROLEUM RENEWABLE ENERGY SUPPLIERS PRICE SPIKES LABOR MARKETS DIESEL COMMODITY PRICES OIL INDUSTRY ENERGY COSTS FOSSIL PRICES APPROACH ELECTRICAL POWER ENERGY This note combines and distills existing and new research to inform discussion on the topical policy issue of oil prices. Following four years of relative stability at around $105 per barrel (bbl), oil prices have declined sharply since June 2014 and are expected to remain low for a considerable period of time. The drop in prices likely marks the end of the commodity supercycle that began in the early 2000s. Since the past episodes of such sharp declines coincided with substantial fluctuations in activity and inflation, the causes and consequences of and policy responses to the recent plunge in oil prices have led to intensive debates. This paper addresses four questions at the center of these debates, with particular emphasis on emerging market and developing economies: 1) How does the recent decline in oil prices compare with previous episodes? 2) What are the causes of the sharp drop and what is the outlook for oil price? 3) What are the economic and financial consequences? 4) What are the main policy implications? The decline in oil prices will lead to significant real income shifts from oil exporters to oil importers, likely resulting in a net positive effect for global activity over the medium term. However, several factors could counteract the global growth and inflation implications of the lower oil prices. These include weak global demand and limited scope for additional monetary policy easing in many countries. The disinflationary implications of falling oil prices may be muted by sharp adjustments in currencies and effects of taxes, subsidies, and regulations on prices. Regarding fiscal policy, the loss in oil revenues for exporters will strain public finances, while savings among oil importers could help rebuild fiscal space. Lower oil prices also present a window of opportunity to implement structural reforms. These include, in particular, comprehensive and lasting reforms of fuel subsidies, as well as energy taxes more broadly. 2016-01-11T22:56:35Z 2016-01-11T22:56:35Z 2015-03 Working Paper http://documents.worldbank.org/curated/en/2015/12/25666189/great-plunge-oil-prices-causes-consequences-policy-responses http://hdl.handle.net/10986/23611 English en_US Policy Research Note,PRN/15/01; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Working Paper Publications & Research |