Discussion On Falling Oil Prices- class 9.

As a circle time activity, the students of IX-D and IX-E took part in a discussion on falling oil prices on February 3rd 2016. We not only discussed the reasons behind the falling oil prices but its effects on India and the gulf countries. The discussion was initiated by Aman Narang, Jasnoor Kaur Suri, Mallikaa Mukim, Arham Mehta and Umang Chabbra. Many relevant questions were raised by the students and insightful observations were made. Ms. Veena Awasthi, our teacher, finally concluded the discussion by summing up the points we had put forward, along with other relevant points.

Reasons behind Falling Oil Prices

As observed, the oil prices have been falling for the past two or three years. There are many reasons for this:

1. Earlier, the control of oil prices and the export of oil to different countries was the monopoly of the OPEC ( Organisation of Petroleum Exporting Countries) which mainly comprised of the gulf countries. But in recent years, Russia and the United States of America have joined the race of oil production. The U.S.A has started extracting oil (Shale Gas) from its reserves in North Dakota. Russia has also started exporting oil in spite of the sanctions imposed on it. This has increased the supply of oil but the demand has remained constant, so the oil prices have fallen. The oil price has gone down from $110 per barrel to $27 per barrel in recent years and as a future prediction, it could go as low as $20 per barrel which is a very big setback.

2. Another reason for the falling oil price is a decrease in the demand for oil as many countries are switching over to non-conventional sources of energy.

Effects of Falling Oil Prices 1. Oil producing countries and the exporters of oil will face losses as the demand for oil reduces in comparison to its supply. Many OPEC countries especially Iran, Iraq, Saudi Arabia and other Gulf countries use oil as the main item of export. Their economy is highly dependent on the income earned through oil export. As these economies begin to face an economic slowdown, it will adversely affect the job market leading to unemployment in these countries. These countries have a large Indian worker population who contribute about 4% of the GDP of these countries. The Indians in these countries may lose their jobs and will be forced to migrate elsewhere or come back to India. Moreover our remittances from abroad are likely to decrease.

2. It will adversely affect the share market worldwide which means losses for investors.

The classroom discussion was a fruitful one and gave us a good perspective of the situation.

Himani Arora, Srishti Negi, Gayatri Kundu.