[ti:Falling Oil Prices Affect Nations Differently] [ar:Mario Ritter] [al:Economics Report] [by:www.51voa.com] [00:00.00]From VOA Learning English, this is the Economics Report. [00:05.89]World oil prices have dropped by about 30 percent since June. [00:12.17]That has helped many economies around the world. [00:16.55]When people spend less on fuel, [00:19.78]they can spend more on other goods. [00:22.83]But lower oil prices [00:25.96]also mean reduced profits for national oil companies. [00:30.19]Privately-owned oil producers and companies [00:34.68]that provide services to the oil industry are also affected. [00:40.06]Increased American oil production is one reason [00:44.59]for the drop in world oil prices. [00:47.63]Hydraulic fracturing technology developed in the U.S. [00:52.86]has made the increase possible. [00:55.94]Hydraulic fracturing, or fracking, is a process [01:01.64]of pumping water and chemicals into the ground [01:04.71]to force out natural gas and oil. [01:08.26]It is often used to recover these fossil fuels from rock called shale. [01:15.33]Jim Krane is an energy expert at the James Baker Institute [01:20.90]for Public Policy at Rice University. [01:24.36]He says oil produced from shale has changed the market. [01:30.64]"The shale production that is entering the market [01:34.02]and pushing other sources of supply [01:36.66]that used to come to the U.S. away from the U.S. [01:41.24]and they are trying to find markets for that." [01:42.83]Mr. Krane says slowing economies in China and Europe [01:47.61]have also reduced the demand for oil. [01:50.79]In the past, the Organization of Petroleum Exporting Countries [01:57.07]would react to decreasing demand by cutting production. [02:01.56]The twelve member states often cooperate [02:05.69]to influence oil prices around the world. [02:09.17]However, Jim Krane says members want to defend [02:14.50]their share of the market and are unwilling to make production cuts. [02:19.83]"They are willing to see prices drop for a little while [02:23.93]to see if they could sweat some of these higher-cost producers [02:27.82]out of the market." [02:29.11]However, this could affect small oil producing companies in the U.S. [02:34.85]These companies feel the effects of falling prices [02:39.36]more sharply on their profit margin. [02:42.31]"If you are a small company thinking about investing [02:45.64]in putting in some new oil production, [02:49.13]well, you might think twice if prices are down at $75 (a barrel)..." [02:53.01]U.S. companies are not alone in feeling pressure from falling prices. [02:58.55]Oil makes up 83 percent of Nigeria's exports [03:04.03]and 70 percent of the nation's economy. [03:07.76]Finance minister Ngozi Okonjo-Iweala recently announced [03:13.49]measures the government would take to increase income. [03:17.23]These include new taxes on costly goods [03:21.80]and a six percent cut in government spending. [03:24.99]India is increasingly dependent on oil imports. [03:30.26]Lower oil prices have helped ease high inflation, [03:35.24]which reached 10 percent last year. [03:38.77]The government also has moved [03:41.66]to cut back fuel price supports, or subsidies. [03:46.00]The move has not affected the price people [03:49.53]pay for fuel because of the sharp decrease in oil prices. [03:54.06]In places like Houston, Texas, [03:58.04]the oil industry is a major employer and economic driver. [04:03.17]Economist Patrick Jankowski says [04:08.04]lower oil prices have a clear dollar cost. [04:12.23]"If you look at the production that we get in the state of Texas, [04:15.32]we are producing 4.5 million more barrels [04:18.06]a month than we were doing this time last year. [04:20.05]Yet the value of our production in Texas [04:22.24]has dropped by over a billion dollars a month." [04:24.13]However, Mr. Jankowski believes [04:26.77]the over-supply will slowly disappear. [04:29.65]"By 2016, we will probably see production drop again, [04:33.39]definitely by 2017. [04:35.03]By then we will see prices go back up again." [04:37.63]He says decreasing prices may make [04:41.16]energy company leaders nervous, [04:46.04]but most are prepared for it. [04:51.36]And that's the Economics Report from VOA Learning English. [04:53.50]I'm Mario Ritter.