Crude at $50 shifts wealth, power from petro to consumer nations

The plummeting price of oil means no more trout ice cream.
Coromoto, a parlour in Merida, Venezuela, famous for its 900 flavours, closed during its busiest season in November because of a milk shortage caused by the country’s 64% inflation rate, the world’s fastest.
That’s the plight of an oil-producing nation. At the same time, consuming countries like the US are taking advantage.Trucks, which burn more gasoline, outsold cars in December by the most since 2005, according to data from Ward’s Automotive Group.
The biggest collapse in energy prices since the 2008 global recession is shifting wealth and power from autocratic petro-states to industrialized consumers, which could make the world safer, according to a Berenberg Bank AG report. Surging US shale supply, weakening Asian and European demand and a stronger dollar are pushing oil past threshold after threshold to a five-and-half-year low, with a dip below $40 a barrel “not out of the question,” said Rob Haworth, a Seattle-based senior investment strategist at US Bank Wealth Management, which oversees about $120 billion.
“Oil prices are the big story for 2015,” said Kenneth Rogoff, a Harvard University economics professor. “They are a once-in-a-generation shock and will have huge reverberations.”
Brent crude, the international benchmark, fell as low as $49.66 a barrel on Wednesday, dropping below $50 for first time since 2009. Prices dropped 48% in 2014 after three years of the highest average prices in history. West Texas Intermediate, the US benchmark, plunged to as low as $46.83 on Wednesday, about a 56% decline from its June high. “We see prices remaining weak for the whole of the first half” of 2015, said Gareth Lewis-Davies, an analyst at BNP Paribas in London.
If the price falls past $39 a barrel, we could see it go as low as $30 a barrel, said Walter Zimmerman, chief technical strategist for United-ICAP in Jersey City, New Jersey, who projected the 2014 drop. “Where prices bottom will be based on an emotional decision,” Zimmerman said. “It won’t be based on the supply-demand fundamentals, so it’s guaranteed to be overdone to the downside.”
The biggest winner would be the Philippines, whose economic growth would accelerate to 7.6% on average over the next two years if oil fell to $40, while Russia would contract 2.5% over the same period, according to an Oxford Economics Ltd’s December analysis of 45 national economies.