TW: Plummeting oil prices help US consumers (at least in the short run as if everyone runs back to their SUVs then we can safely expect oil crunch 2.0 in 2010 or 2011). But the producers who are generally poorly governed by oligarchs with dubious competence (Chavez/Nigeria) or expensive nationalist appettites (Putin), the prices are highly problematical. The chart above (from Barry Ritholz's blog) shows estimated (I emphasize estimated because who really knows) breakeven price per bbl needed by various countries in order to fund their 2009 spending (note Russia is not on the chart but has a $70ish breakeven). With oil at $45/bbl and perhaps headed lower, they all have issues some worse than others.
Nigeria is a mess whose problems seem to get worse as oil prices go up (their fundamental problem is crime so lower prices just means less to fight over), so they are not the big problem. The Saudis/Kuwaitis/UAE have been through this before, they will have less to invest which has implications for sure but is not existential. Russia and Venezuela are the ones to watch. Putin and Chavez have built their political power on the back of high oil and bombastic nationalism, good luck to both in 2009.
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