[Business★★★] World Oil Prices Slide to Lowest Since 2009

(P1) Fewer PETRODOLLARS to recycle means a QUASI-tax HIKE for countries in OPEC and producers like Russia (P2) As of today a BARREL of oil (should you need one delivered in January) will SET YOU BACK less than $60. The last time it was that cheap was in May 2009, just after the FEDERAL RESERVE launched its QUANTITATIVE EASING program to stop the U.S. economy IMPLODING. (P3) The TRIGGER for Friday’s TUMBLE was a new report from the INTERNATIONAL ENERGY AGENCY ON THE OUTLOOK for the world market in 2015. The Paris-based organization cut its forecast for demand growth next year by 230,000 barrels a day to 900,000 b/d. That’ll mean that the planet is “only” burning an average of 93.3 million b/d next year, up from 92.4 million this year. (P4) The IRONY in the IEA’s report is that it’s oil-producing countries that will be using less oil than expected next year, a STARK illustration of how the 40% drop in prices this year has transferred billions of dollars of SPENDING POWER from those countries to consumers elsewhere. Economists might be COOING over how lower oil prices are acting like a tax cut in the West, but from to and Russia, it’s like a tax increase, as there are few tax dollars available to recycle into public-sector investment, WAGES or PENSIONS. (P5) A further source of pressure on prices Friday was another SLOWDOWN in Chinese industrial output, although for once there was enough positive news to more than OFFSET that. (P6) Annual growth fell to 7.2% in November from 7.7% in October–clearly short of market expectations of 7.5%. ON A BRIGHTER NOTE, consumption HELD UP well, with November retail sales up 11.7% on the year. In addition, data on new loans also EXCEEDED expectations, DAMPING fears about the health of the country’s financial system. (P7) The future contract for crude briefly fell below $59/bbl on the news, but by mid-morning in Europe had recovered to $59.23/bbl.

Words: 327 Source: http://time.com/3631328/world-oil-prices-lowest/

Discussion Questions If you found the passage difficult to read or had problems understanding specific words or idiomatic expressions, please discuss them with your tutor. The following discussion questions should be answered in your own words and with your own arguments.

1. Briefly summarize the content of the article in your own words. 2. How much is a barrel of oil these days? Is it cheap (P2)? 3. What consequences would cheap oil have on global energy consumption (P3)? 4. Why is lower oil price acting like a tax in crease for countries like Russia (P4)? 5. What else do you know about the low oil price these days? Share your insight with your Cambly tutor!

What/Who/Where Are They? Federal Reserve (Organization) The Federal Reserve System is the central banking system of the United States. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, largely in response to a series of financial panics, particularly a severe panic in 1907. Over time, the roles and responsibilities of the Federal Reserve System have expanded, and its structure has evolved. Events such as the Great Depression in the 1930s were major factors leading to changes in the system. The U.S. Congress established three key objectives for monetary policy in the Federal Reserve Act: Maximum employment, stable prices, and moderate long-term interest rates. The first two objectives are sometimes referred to as the Federal Reserve's dual mandate. Its duties have expanded over the years, and today, according to official Federal Reserve documentation, include conducting the nation's monetary policy, supervising and regulating banking institutions, maintaining the stability of the financial system and providing financial services to depository institutions, the U.S. government, and foreign official institutions. International Energy Agency (Organization) The International Energy Agency is a Paris-based autonomous intergovernmental organization established in the framework of the Organisation for Economic Co-operation and Development in 1974 in the wake of the . The IEA was initially dedicated to responding to physical disruptions in the supply of oil, as well as serving as an information source on statistics about the international oil market and other energy sectors. The IEA acts as a policy adviser to its member states, but also works with non-member countries, especially China, India, and Russia. The Agency's mandate has broadened to focus on the "3Es" of effectual energy policy: energy security, economic development, and environmental protection. The latter has focused on mitigating climate change. The IEA has a broad role in promoting alternate energy sources, rational energy policies, and multinational energy technology co-operation. IEA member countries are required to maintain total oil stock levels equivalent to at least 90 days of the previous year's net imports. At the end of July 2009, IEA member countries held a combined stockpile of almost 4,300,000,000 barrels of oil. West Texas Intermediate (Topic) West Texas Intermediate, also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing. This grade is described as light because of its relatively low density, and sweet because of its low sulfur content. It is the underlying commodity of Chicago Mercantile Exchange's oil futures contracts. The price of WTI is often referenced in news reports on oil prices, alongside the price of from the North Sea. Other important oil markers include the , Oman Crude, and the OPEC Reference Basket. WTI is lighter and sweeter than Brent, and considerably lighter and sweeter than Dubai or Oman.

Vocabulary Petrodollar (n) 오일 달러: 원유 수출에 의해 획득한 외화; 특히 산유국의 수출 대금에서 소비재나 자본재 따위의 수입 대금을 뺀 잉여자금. Quasi- (expression) <‘유사 …’의 뜻> Hike (n) (가격·경비 등의) 대폭 인상 Barrel (n) 한 통의 양; 배럴(석유 단위로 120~159 리터) Set someone back (expression) ~에게 ~(의 비용)을 들이게 하다 Quantitative easing (n) 양적완화, 중앙은행이 통화를 시중에 직접 공급해 신용경색을 해소하고, 경기를 부양시키는 통화정책 Implode (v) 자체적으로 파열되다, 폭파하여 안쪽으로 붕괴하다 Trigger (n) (반응·사건을 유발한) 계기 Tumble (v) 폭삭 무너지다, 크게 추락하다 On the outlook (expression) 감시하고, 경계하고, 대기하고 Irony (n) 아이러니, 역설적인 점 Stark (adj) (차이가) 극명한 Spending power (n) 선택적 요구, 신제품에 대한 수요의 형성을 말한다. Coo (v) (특히 사랑하는 사람에게) 달콤하게 속삭이다 Wage (n) 임금(賃金) Pension (n) 연금; 생활 보조금, 수당 Slowdown (n) (속도·활동의) 둔화 Offset (v) 상쇄하다 On a brighter note (expression) 한편으로 좋은 소식은~ Hold up (expression) 견디다 Exceed (v) (허용 한도를) 넘어서다 Damping (n) 제동, (진동의) 감폭 Benchmark (n) 기준(점)