Oil Price Crash: What Does It Mean for Caribbean Countries Like St. Vincent and the Grenadines!
The United States Oil prices have hit below zero for the first time in its economic history due to the sudden rise in the COVID-19 pandemic cases all over the world, thus risking oil companies into bankruptcy.
With the United States Oil prices running at a negative, it may have a huge impact on the countries that import oil from them as a massive crash can lead to even more reduction in the oil prices for other countries in terms of different currency exchange rates for every country. However, this is not the case for St. Vincent and the Grenadines.
This sudden price crash is explained by a drastic fall in demand for oil, thus creating a tremendous amount of surplus with limited storage capacity problems as many oil producers are running out of oil barrels to store the extracted oil. The situation is such that producers are now paying the buyers to take excess oil off their hands.
The consumption and demand for oil also took a hit, with many people staying at home and travel by car and planes have been limited. Apart from this, many industries and sectors have stopped production. Their employees are forced to stay at home due to safety concerns. They are required to adapt to the quarantine situation because of which many factories are now out of business, and not much revenue is being generated.
There has been unprecedented stress regarding future investments and stocks as the S&P 500 has seen a decline of more than 40 percent value in its energy sector this year. The Dow Jones Industrial Average member ExxonMobil also followed them with a 38 percent decline. According to the analysts, this wide gap of prices may continue the entire year for the stocks with storage capacities running out.
One of the biggest problems here is that the effects of the oil price wars lingered even though OPEC reached an agreement. Because of this, the question arises that for how long will the oil prices remain cheap and force other companies into bankruptcy? :(
The Oil price have been drop so bad and yet people have been paying 11.97 XCD per gallon for a long time back home in St. Vincent and the Grenadines , and it comes as no surprise that they are still paying high prices for a barrel that does not even cost a dime. This behavior is also affecting our electricity prices as well, as high rates of oil impact the electricity prices simultaneously, thus causing an even greater outburst from the producers as well as the citizens. of St. Vincent and the Grenadines.
There have been no significant changes in their oil prices. One begs to ask the question of why are the Caribbean countries like St. Vincent and the Grenadines still paying more for oil when the world oil prices are falling apart?
Since these countries like St. Vincent and the Grenadines are apt at producing their own oil, their capacity is small as compared to that of other countries around the world. They can choose to import that excess oil at low prices as well, but the question still remains that why one should pay more for something so less. The government and the policymakers can only answer this question.
Kemron L Bacchus
#staysafeOil Price Crash: What Does It Mean for Caribbean Countries Like St. Vincent and the Grenadines!