To the typical American consumer, the recent collapse in the price of oil is viewed as a good thing on several levels: 1) it means more money is available from income to spend on other fixed or discretionary expenses and 2) it means the evil oil companies are hurting. The downsides are rarely considered or understood. For example: 1) some of the highest paying professions in the US are in the oil industry and employees are being laid off by the tens of thousands, 2) economies in cities like Houston, and entire states like North Dakota, that are highly dependent on the oil industry are in a tailspin, leading to foreclosures, business failures, and reduced public spending, 3) oil companies that took on too much debt during the oil boom are declaring bankruptcy and defaulting on their debts, which has contributed to the recent stock market slide, and 4) one of the goals of the Saudi Arabian orchestrated price collapse, that of destroying the US shale oil industry and maintaining Saudi market share has been successful.
One may say, and in many ways rightfully so, that the oil industry has always been a cyclical, boom and bust industry, and this downturn is retribution for many years of excesses. However, included in the above examples, there is a human side to consider. And what if we look outside the US to a poor, third world country, and try to envision the impact the oil price collapse might have on an entire nation?
OWOE would like to share with our viewers a blog posted by Jorge and Claudia, an expatriate couple living in Luanda, the capital and largest city in the country of Angola, a country where everything is directly or indirectly dependent on oil
They have written an exceptionally interesting and compelling article about the impact of the oil price collapse on the people of Angola. At a macro-economic level public debt has increased 30%, and fiscal revenue and public spending have decreased 43%. Inflation has doubled and is still increasing. The national currency, the Kwanza, has officially been devalued 30% this year, and on the streets the US dollar is worth roughly 2 times the official price. At the personal level, since virtually every consumer item in Angola is imported, and since there is little access to foreign currency, people can’t afford to buy food, travel to work, or go abroad for health care.
Their view is that people in developed countries may think they know what an economic crisis is, but if they haven’t lived it, they can’t fully understand the depth of the problem. Please read the full story at Oil Crash in Angola.