Tags: oil prices | gas | ISIS | Iran | Syria | Middle East

WSJ: Lower Oil Prices Hurting Countries on US 'Naughty List'

Tuesday, 09 December 2014 09:27 AM EST

Millions of Americans are enjoying the plunge in gasoline prices over the past few weeks — and perhaps none more so than President Barack Obama, according to The Wall Street Journal.

After a horrendous year for the commander in chief that climaxed with the Democrats losing the Senate, the fall in oil prices has been a boon to his troubled presidency.

The average price for a gallon of gas hovers around $2.75, and it is expected to remain fairly static deep into next year, while experts estimate that low oil prices could remain until the end of the decade, which would also keep down the cost of oil-heating bills.

The fact that Americans have a little more money in their pocket boosts the U.S. economy, especially during the Christmas period, but the real bonus for Obama is that the decline in prices is having a detrimental effect on countries that are on the U.S. "naughty list," the Journal says.

Oil-producing countries, such as Iran, Syria, Venezuela, Russia, and even the terror group Islamic State, are feeling the pain of the decrease in the price of a barrel of oil, down from $100 five months ago to $65 a barrel now.

Even though supply outstrips demand by 1 million barrels a day, Saudi Arabia has no plans to cut production to wipe out the excess, for its own reasons.

The price of a gallon of gas could drop to "well below" $2.50 in the next few weeks, saving the average family $750 over the next year, Doug Handler, chief economist of IHS Inc., told the Journal, plus there is the possible advantage of falling prices as manufacturers also benefit from lower oil prices.

Although the savings will result in increased spending by delighted consumers and thus helping Obama domestically, the benefits are somewhat offset by the decrease in production by America’s own oil-drilling industry.

On the other hand, the advantages overseas are even greater for the president when it comes to his foreign policy, with Iran and Russia feeling the effect of their dependence on oil income while struggling European countries are aided by the decrease.

Iran is already facing tough economic sanctions from the U.S. and allies due to its nuclear program while Russia is under duress from similar sanctions because of its invasion of Ukraine’s Crimea. And the low oil prices just add fuel to the fire in both countries, the Journal reported.

The U.S. and allies are in the middle of difficult negotiations with Iran to prevent the Middle East nation from producing a nuclear weapon, and the fact that its oil profits have been decimated puts an extra squeeze on Iran to make an agreement.

In Russia’s case, U.S. officials say that with the loss of oil revenue and the cost of paying for Ukraine separatist troops, it’s heading for a recession, which is likely to prevent President Vladimir Putin from further aggression in the region, the newspaper says.

Although Syria produces its own oil, it’s not enough to help the war-torn nation’s economy, and it has to depend on the generosity of Iran, which also helps to fund the terror group Hezbollah.

The Islamic State (ISIS), with a vast army of terrorists to arm and feed, has been stealing oil from Syrian refineries and then selling it deeply discounted on the black market, and now the price is even cheaper.

The lack of oil money can only help stabilize the Middle East, with Egypt, Jordan, Lebanon, and Israel feeling the benefits, said the Journal, while noting that the only drawback is that embattled Iraq is also affected by the pinch.

Venezuela, which feeds anti-American sentiment in South America, has also taken a hit from lower oil prices, with its closest ally Cuba likely losing some of its financial aid as well.

"The Venezuelans are in deep trouble," a senior U.S. official told the Journal.

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Millions of Americans are enjoying the plunge in gasoline prices over the past few weeks — and perhaps none more so than President Barack Obama, according to The Wall Street Journal.
oil prices, gas, ISIS, Iran, Syria, Middle East
Tuesday, 09 December 2014 09:27 AM
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