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16-10-2014, 06:59 AM
Price plunge could see Europe saving US$80b in energy imports
Imports for oil, natural gas and thermal coal cost EU around US$500b in 2013
16 Oct5:50 AM
London
THE European Union could save up to US$80 billion in energy imports if oil prices remain low, providing some relief to households and companies in a region that has been laid low for the last five years.
The price of oil has dropped over a quarter since the summer to below US$85 per barrel, a level last seen in June 2010. Energy imports for oil, natural gas and thermal coal cost the European Union around US$500 billion in 2013, with three quarters of that being spent to buy oil, Reuters research shows.
This year's figure could fall by almost US$25 billion to around US$485 billion, and if oil prices average below US$90 a barrel next year, the overall import bill could fall as low as US$425 billion, over US$80 billion less than what was paid by the EU for imports in 2013.
Falling energy prices reflect a darkening world economic outlook but they could temper any new downturn. While headline inflation rates could be pushed lower, households and energy-intensive industries in countries that rely on oil imports will find their costs reduced, raising at the margin their ability to spend and invest.
"Global oil prices have fallen in almost every currency and that should lead to a boost in consumption," Bank of America Merrill Lynch said on Wednesday.
Oil is the world's most important fuel but coal is the most important for electricity generation. The price of coal has almost halved since 2011. Inflation is already noticeable by its absence in most of the world and the eurozone is battling to ward off deflation.
Figures from China on Wednesday showed inflation hit a near five-year low of 1.6 per cent despite economic growth which is expected to hold above 7 per cent this year. The British economy looks robust yet inflation has dropped to 1.2 per cent and US inflation was last reported at 1.7 per cent.
The euro has dropped nearly 10 per cent against the dollar since May. That will partly offset the fall in dollar-denominated oil but will push up inflation.
Analysts initially said that the oil price decline was largely due to greater supply from the North American shale boom, the tapping of new offshore reserves worldwide and greater output of coal.
But they have also begun pointing to a slowdown in demand, citing China's ebbing thirst for oil and what could be its first drop in demand for coal in over a decade as economic growth slows. REUTERS
Imports for oil, natural gas and thermal coal cost EU around US$500b in 2013
16 Oct5:50 AM
London
THE European Union could save up to US$80 billion in energy imports if oil prices remain low, providing some relief to households and companies in a region that has been laid low for the last five years.
The price of oil has dropped over a quarter since the summer to below US$85 per barrel, a level last seen in June 2010. Energy imports for oil, natural gas and thermal coal cost the European Union around US$500 billion in 2013, with three quarters of that being spent to buy oil, Reuters research shows.
This year's figure could fall by almost US$25 billion to around US$485 billion, and if oil prices average below US$90 a barrel next year, the overall import bill could fall as low as US$425 billion, over US$80 billion less than what was paid by the EU for imports in 2013.
Falling energy prices reflect a darkening world economic outlook but they could temper any new downturn. While headline inflation rates could be pushed lower, households and energy-intensive industries in countries that rely on oil imports will find their costs reduced, raising at the margin their ability to spend and invest.
"Global oil prices have fallen in almost every currency and that should lead to a boost in consumption," Bank of America Merrill Lynch said on Wednesday.
Oil is the world's most important fuel but coal is the most important for electricity generation. The price of coal has almost halved since 2011. Inflation is already noticeable by its absence in most of the world and the eurozone is battling to ward off deflation.
Figures from China on Wednesday showed inflation hit a near five-year low of 1.6 per cent despite economic growth which is expected to hold above 7 per cent this year. The British economy looks robust yet inflation has dropped to 1.2 per cent and US inflation was last reported at 1.7 per cent.
The euro has dropped nearly 10 per cent against the dollar since May. That will partly offset the fall in dollar-denominated oil but will push up inflation.
Analysts initially said that the oil price decline was largely due to greater supply from the North American shale boom, the tapping of new offshore reserves worldwide and greater output of coal.
But they have also begun pointing to a slowdown in demand, citing China's ebbing thirst for oil and what could be its first drop in demand for coal in over a decade as economic growth slows. REUTERS