The price of oil has been falling since 2014, reaching a new low of $52 a barrel.
This low price is making consumers feel relief and is making producing nations face a potential economic meltdown.
The record high price was fixed in 2008 at $135 per barrel and has been bouncing above the $100 level ever since (except during the financial crisis of 2009).
The reason for the high prices of recent years was soaring consumption in developed countries and conflicts in in major oil nations like Iraq and Libya.
Oil producers couldn’t satisfy the demand, forcing companies to spike the prices. But at the end of 2014 the rapid shift happened, slicing the price of barrel in half.
The $52 price was a consequence of several changes in global economics. First of all, the biggest consumer-country, the US started using fracking and horizontal drilling to extract oil from shale formations in North Dakota and Texas.
It has led to four million barrels of crude oil per day being added to global market.
Other reasons for the price drop include, Libyan rebels reopened their closed oil terminals, Arabian countries dealt with their conflicts, and US sanctions were canceled. As a result, millions of barrels have flooded the market.
The Organization of the Petroleum Exporting Countries has proposed that those countries suffering from this oil crisis should cut back on production in order to prop up the price, and balance their budgets to pay for government spending.