Kris Bledowski, Director of economic studies at the Manufacturers Alliance for Productivity and Innovation notes:
"The answer depends on how “stability” is defined. In political terms, one could see some instability creep in or deepen in countries where oil plays a disproportionately large fiscal role.
Yet this impact would be felt locally rather than globally, andmostly in countries with already-weak polities. Venezuela, Nigeria, or parts of the Middle East come to mind. It’s less likely that potential conflicts could spill over outside domestic or localtheaters.
The economic impact has already been felt the world over. In the United States, mining activity has depressed industrial output, while in Canada the entire economy plunged into recession in 2015 as a result of sharply lower oil prices.
At the same time, income losses are being at least partly offset by gains on the consumer end. Shifts in relative prices of major inputs or outputs occur all the time,and the world economy is resilient enough to absorb them. Overall, oil and its derivatives make up a small and declining share of unit energy costs.
If global investment flows are more unpredictable, currencies more volatile, and changes in income more pronounced, other factors should be taken into account as well. Among them are differences in monetary policies (in the United States and the EU), private debt levels (in Brazil and China), and economic governance (in Russia and Saudi Arabia).
Ian Bremmer, President and founder of Eurasia Group says:
"Did Mikhail Gorbachev’s reforms kill Soviet stability? No. They hastened the melting of frozen instability. That’s the impact of cheap oil on the Middle East, in particular the Sunni Arab petrostates and the governments that rely on their largesse.
There’s already little domestic legitimacy keeping these regimes in place. The United States has little desire toact as the region’s policeman, and nobody else is going to pick up the baton.
Communication technologies allow disenchanted young men to more easily mobilize.
And there are scant few social, economic, and political reform efforts among the governments themselves; security solutions don’t address the underlying problems. Cheap oil makes those conflicts grow sharper. And faster."
Jan Cienski, Energy and security editor at POLITICO says:
"No, cheap oil won’t kill global stability—infact, it will bolster it. That doesn’t mean low oil prices aren’t terrible news for a host of countries like Russia, Saudi Arabia, Venezuela, Angola, and other emerging markets that have built their budgets on oil exports. But as their revenues shrink, their largely autocratic rulers will have to focus more on keeping their people from rebelling over budget cuts and less on causing trouble abroad.
No, cheap oil won’t kill global stability—in fact, it will bolster it. That doesn’t mean low oil prices aren’t terrible news for a host of countries like Russia, Saudi Arabia, Venezuela, Angola, and other emerging markets that have built their budgets on oil exports.
But as their revenues shrink, their largely autocratic rulers will have to focus more on keeping their people from rebelling over budget cuts and less on causing trouble abroad."
Deborah Gordon, Director of Carnegie’s Energy and Climate Program notes: "mighty global omnipotence is often attributed to oil. But it’s unclear whether low (or high) oil prices themselves can be squarely blamed for growing global instability. Increasing oil market volatility, however, could prove to be a stronger destabilizing force.
If oil prices continue to swing wildly back and forth in the years ahead, this could confound economic, technological, and geopolitical fundamentals."
Note EU-Digest: Wall Street and the financial Industry seem to be the only ones who are saying that lower oil prices will contribute to Global Economic and Political Instability , mainly because it hurts their energy investments and market portfolio's . The drop in oil prices, however, has been very beneficial to consumers and the the economy in general.
EU-Digest
