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Vineri, 08/01/2016

We've all been glad when we saw the prices at the gas station, but we never thought that the decline of prices with some pennies actually means a great disaster for the economy.

In this context, the financial analyst Ionel Blanculescu, contacted by DC News explained what the bad news is.

"The dramatic fall in the crude oil price per barrel means bad news, not good news for us, although some of us jump up and down of happiness at the fuel pump because the prices decreasewith a few pennies!

There is a paradox theory, acting in many fields of economic science, among which is the industry in general, and the oil and gas in particular, in our case. It says that, the more the crude oilprice per barrel decreases dramatically - for various reasons, as itis the case at the moment, when the quotation for the American market on NYMEX WTI Crude has reached a critical and historical price threshold of 32.66 dollars per barrel, and the Brent Crude, and the European quotation on ICE was of 32.91 dollars per barrel, also a historical and critical threshold, getting dangerously closer to the psychological level of below 30 dollars per barrel – the more the adverse effects hit the global consumer, even if apparently it enjoys the decrease of prices when it fills the tank, "said the financial analyst.

Increased unemployment, negative effects multiplied on horizontal market

"By lowering the quotations of crude oil below 50 dollars per barrel, the investments in this very important industry are no longer profitable, leading to their shutdown, phase in which we find ourselves today. Worldwide, investments in this industry have been reduced to the maximum, the costs are managed with maximum efficiency, which means increased unemployment, negative effects multiplied on horizontal market, given that only on a regional company, such as OMV Petrom, depend more than 17,000 other companies.

It is very clear that the dispute between Saudi Arabia, namely OPEC, 40% of the world production of crude oil and much of the Arab world, on the one hand and Iran on the other hand, along with the drastic reduction in consumption in China, generated by the fall of economic growth and the giant oil reserves accumulated in the USA, make the price for a barrel of crude oil to continue to fall , providing ideal conditions for the most devastating blows applied to the petroleum industry in general and the hundreds of thousands of companies, suppliers and customers, in particular, that affect the lives of us all, wherever we are, in the USA or Europe," added Ionel Blănculescu.


The Financial Analyst cautions that the frenzy of joy that the price at the pump drops continuously must stop because it is false good news, the negative effects being huge.


"The frenzy of joy that the price at the pump drops continuously has to stop, it's a false good impression, the negative effects on each of us being far bigger than the gain, of course without makinga direct connection with what generated what we believe today is worse, that 2015 wasn't a year too good, not to mention 2016, we will find ourselves what lies ahead. This is an emotional approach, without foundation in what would be better for us, we need to have a rational, responsible approach and we have to believe that everything that happens now, harming the oil industry reaches us and will affect us worse in this new year", said Ionel Blănculescu for DC News.