Oil Supply Cuts: The Winners & Losers

Posted on 04. Feb, 2009 by Ross in Energy Shortages

As energy shortages drive oil prices upwards once more, developing nations stand to gain and lose the most.

After a series of falls in the price of crude oil, OPEC has been slashing production to try to stabilise  - and then substantially increase - the price once more, with US agency predictions expecting oil prices to more than double again to $100 in 2009. Unpredictable energy prices have a huge effect on the energy efficiency of companies and individuals around the world, but who stands to gain and lose the most?

The main government winners of rising oil prices are the OPEC countries themselves, particularly Venezula and Iran. Both nations have national spending plans strongly linked to high energy prices, and by creating oil shortages they are able to sustain the high levels of expenditure on social programmes (Venezula), military spending and nuclear research (Iran) which they committed to prior to the global economic downturn. Saudi Arabia, although not to the same extent, also has budgetary problems from fluctuating prices as it now looks to develop it’s own renewable energy future.

Although every nation feels the pinch at the fuel pumps with high oil prices, its developing nations which struggle the most. Kenya is currently undergoing a critical fuel shortage, with the government having to rush through legislation in order to try to stabilise the situation. Shortages have caused massive disruption across the country, in scenes familar to many around the world. As OPEC looks to boost its own cash flow by slashing production, its fellow Third World countries will continue to pay the heaviest price.

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