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Here’s a plain English explainer on the global oil price debacle

oil price

An oil well in Bahrain. (octal/Flickr)

Oil prices across the globe sank 5% after a trade with Asia.

Low prices for oil seem awesome for those of us with tight budgets filling up our gas tanks, but it is actually much more complicated and problematic than that.

OPEC, short for the Organization of the Petroleum Exporting Countries, consists of countries like Saudi Arabia, Russia, and Kuwait met today to strike a deal on oil in order to manage the industry. Yesterday, the countries failed to come to an agreement in Doha, Qatar.

Iran, another oil producing country, was noticeably left out.

Because of the current sky-high production of oil, in part an effect of fracking and other increased technologies, the cost of oil has been going down so much that OPEC had to meet to solve the problem.

It's a simple matter of supply-and-demand. Remember learning that from your boring economics teacher? Well, currently the supply is up and its higher than the demand, so prices are low.

Saudi Arabia, in a game of chicken, said they wouldn't freeze any of their production unless Iran did that same. Now, neither are reducing production and the prices remain way down.

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Here’s a plain English explainer on the global oil price debacle

Allison Hollender

Allison is originally from Fresno, California, but made her way to the beautiful Central Coast, where she is a student at UC Santa Cruz, earning a degree in both history and politics, working as a reporter for City on a Hill Press, and guzzling gallons of coffee. She is a lover of television and all things Amy Poehler. Follow her embarrassing attempts at jokes on Twitter @alleyrenee16.

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