The sharp decline in oil prices over the last year has broadly benefited global consumers, who have more money to spend on everything else besides energy. But sudden and sharp price swings also are making the oil market more volatile, which threatens to delay business investment, slow job growth and, eventually, crimp consumer spending, a team of economists warns.
Brent crude, the global benchmark, and U.S. crude both plunged by about half by December after reaching peaks of $112 a barrel and $105 a barrel, respectively, in June 2014. Prices have since recovered somewhat from five-year lows — to about $65 a barrel for Brent and $60 a barrel for U.S. crude — but they aren’t expected to see triple digits again for the foreseeable future.
In a report published Tuesday by the Global Commission on the Economy and Climate, an international initiative led by former Mexican President Felipe Calderón, economists urged global policymakers to scrap subsidies for oil and other fossil fuels and instead invest heavily in renewables, which are becoming steadily cheaper and less volatile as energy sources.