Plummeting oil prices are a boon to the U.S., but could bring instability to oil-producing nations with budgets that rely on oil revenues, Treasury Secretary Jack Lew said Wednesday
“In terms of the macroeconomic impact on the United States, lower energy prices will bring a stronger economy,” Lew said at an event at the University of Pretoria in South Africa, where he was meeting government officials and business leaders.
The price of a barrel of Brent crude oil has fallen from over $100 in September to $87 Wednesday. Lew acknowledged that further prices drops could hurt U.S. oil producers, but noted that “I don’t see a dramatic shift yet.”
While falling energy prices were a good thing for the economy overall, Lew said, he also warned that for “the producing countries there will be stress on budgets that have been exclusively dependent on oil revenues for their budgets,” according to the Wall Street Journal’s report from South Africa. Lew added that countries facing geopolitical risks “may be more amenable to cooperation and policies that lead to a safer global geopolitical environment” because of the price decline.
Top among the countries involved in facing geopolitical trouble that rely on oil revenues is Russia, which has been at odds with U.S. policy over its military actions related to Ukraine over the course of the year.
Falling oil and gas prices will be on net a boon to the U.S. economy by putting more money in consumers’ pockets, according to experts. The fallout to the domestic oil-producing industry is expected to be limited unless oil prices fall significantly further.
