Low oil prices are really starting to cut into OPEC's finances. Energy Department data show that OPEC countries could lose $375 billion in export revenues through 2015 if oil prices average under $70 a barrel.
The U.S. Energy Information Administration reports that OPEC countries, except Iran, are set to earn about $700 billion for oil exports in 2014 — a 14 percent decrease from oil 2013 oil export revenues. But that slight decrease will be compounded in 2015 when oil export revenues slide 46 percent below 2013 levels to only $446 billion.
The primary drivers behind lost export revenue are decreases in OPEC exports and plummeting crude oil prices.
All in all, OPEC could be looking at $375 billion less in revenues in 2015 compared to 2013 — a huge blow to member state finances. Several OPEC members, like Venezuela, Iraq and Ecuador are running huge budget deficits, according to the International Monetary Fund.
For example, Ecuador is looking at a budget gap eating up 4.3 percent of the country's economy. OPEC finances will only get worse if oil prices continue to remain relatively low. EIA projects oil prices will average "$68 per barrel in 2015, down from $100 per barrel in 2014 and $109 per barrel in 2013."
OPEC members are heavily reliant on crude oil sales to fund their governments. EIA notes that that "[g]eopolitical risk may also be elevated because of lower government spending" due to falling oil prices.
Some experts have warned that low oil prices will also hurt U.S. finances as well. Falling prices could curtail production, which means fewer royalties going to federal, state and local agencies. Indeed, EIA has already cut its production forecast for January 2015 by 100,000 barrels per day.
Oil prices have fallen about 45 percent since this summer, due to stable Middle Eastern production despite conflicts, weak economic growth and booming production from the U.S. and Canada.
Prices were driven down to their current levels below $60 per barrel after OPEC announced it would not curtail production to buoy prices. This announcement came as a shock and angered several OPEC members who pushed for production cuts.
There is some debate over whether or not low oil prices could harm shale oil production, which can be relatively costly in certain parts of the country. But officials from North Dakota have said prices can fall to as low as $40 per barrel before production is in jeopardy on the Bakken shale formation.
But the plus side is that U.S. consumers pay less at the pump and for other goods, as lower fuel prices lower costs for businesses. EIA projects that U.S. consumers are set to save $550 on gas next year thanks to lower prices.
Lower gas prices are also a welcome relief to millions of American who will be travelling for the holidays this year.
AAA estimates some 89.5 million Americans will be road-tripping this holiday season to visit relatives for Christmas, party down on New Years or maybe just enjoy a relaxing vacation.
"'Tis the season for holiday travel, and this year more Americans will join with friends and family to celebrate the holidays and ring in the New Year than ever before," said Marshall L. Doney, AAA's president. "While the economy continues to improve at an uneven pace, it seems more Americans are looking forward with increasing consumer confidence, rather than looking back at the recession."
The national average price of gasoline stood at $2.50 per gallon on Wednesday, down from $3.22 cents from a year ago.Facebook, Google Plus, & Twitter. You can also get Freedom Outpost delivered to your Amazon Kindle device here.