Falling Oil Prices Are Causing More Road Deaths, Unemployment And Pirates To Change Tactics

27/02/2016 15:37 | Updated 27 February 2016

A fierce oil price war causing costs to tumble the world over is having some extraordinary effects.

While oil producing nations continue to pump millions of barrels into worldwide markets, big drilling firms are cutting thousands of jobs and shelving the development of new pipelines.

crude price

Crude oil has plunged to its cheapest price since 2003, as shown in this infographic produced for HuffPost UK by Statista

The current situation has been brought about by a crisis of over supply and stagnant demand, according the Chief Markets Commentator at investment firm Charles Stanley. "There's too much oil gushing into global markets," Garry White told The Huffington Post UK.

"Alongside this there's the situation with Iran. Tension between Tehran and Riyadh has heightened since the Iranian nuclear deal, and Saudi Arabia is keen to protect its position as the world's biggest oil producer.

"For oil importers this means cheaper prices at the pump causing the level of confidence among consumers that a substantial tax cut would inspire."

Yet increased confidence isn't the only outcome of crude's fall. Here are some rather unanticipated consequences of plummeting oil prices...

  • More people are dying on the roads
    More people are dying in road accidents, as falling oil costs translate into cheaper prices at the pump - increasing the number of journeys.

    "A $2 drop in gasoline price can translate into about 9,000 road fatalities a year in the US," sociology professor Guangqing Chi said last month.

    Chi told The Huffington Post that it typically takes almost a year for drivers to adopt new driving habits in response to changes in gas prices.

    Last year, US road deaths rose by 9.3% in the first six months of 2015.

    In the UK, while road deaths have fallen almost every year since 2004, provisional data suggests that fatalities increased in 2015 by 3%, alongside a 2.2% increase in traffic.

    Research has yet to reveal a link between these in the UK.
  • Pirates are finding new bounty
    Pirates are unlikely victims of the global reduction in oil prices.

    Piracy in West Africa’s Gulf of Guinea is now at its lowest level since 2002.

    Speaking to Bloomberg, Florentina Adenike Ukonga, executive secretary of the Gulf of Guinea Commission, said: “With oil at a low bottom price of below $30 per barrel, piracy is no longer such a profitable business as it was when prices hit $106 a barrel a few years ago.”

    Attacks on oil transported declined by around a third last year, according to a report.

    Dyrad Maritime found sea crime figures for 2015 "painted a picture of optimism" - although the threat to vessels not carrying oil remains high.
  • Oil guzzling sea transporters are avoiding shortcuts
    Falling oil prices have translated into rock-bottom "bunker" fuel costs for shipping firms - reducing their incentive to take economical shortcuts.

    Rather than use routes via the Suez Canal, huge container ships are returning to ports in Asia via the "long way around" the southern cape of Africa.

    As prices tumble, burning more fuel is cheaper than paying passage rates through the waterway.

    For one-way passage, an oil transporter can pay as much as $325,000 (2008) to travel through the Suez canal.

    "For many services it is cheaper to sail south of Africa on the [return journey] than to use the canal routings,” SeaIntel, a shipping monitor, said.
  • Thousands are being made unemployed
    Thousands of oil workers have been sacked as a result of dwindling oil prices.

    In the UK alone, 70,000 oil-related jobs are feared to have been lost since the price war began 12 months ago.

    Last month, oil giant BP shed 3,000 jobs on top of previously announced redundancies.

    An estimated 250,000 jobs have been lost across the oil industry as a whole worldwide.
  • Retirement for many looks a bit less comfortable
    Jupiterimages via Getty Images
    The plunging oil price has added to turmoil on stock markets the world over, affecting many of the world's biggest pension funds.

    According to Reuters, shares fell sharply this week as oil prices dropped after Saudi Arabia effectively ruled out reducing the output of oil by its producers.

    Oil prices, lowered by increased production, are one of a number of factors worrying investors.

    The FTSE 100 index of Britain's biggest traded companies was down 15.38% on a year ago as of Wednesday. The index holds millions of Brit's pension pots.

    "The markets are really worried that we are missing something here, that the global slowdown may be more significant than we are recognizing and that slowdown could be causing oil prices to drop, and commodities prices in general," Tracie McMillion of Wells Fargo Private Bank told Reuters.
  • Demand hasn't actually increased that much
    Perhaps the most surprising effect of diving oil prices has been that demand hasn't risen significantly.

    Despite costs plunging, European economies remain weak, China is decelerating and growing energy efficiencies mean vehicles need less fuel.

    So the overall effect has been a flatlining of demand, rather than an increase, according to PwC (PDF).
  • It costs more to travel by air
    And despite all of this, airfares for passengers flying in and out of Britain jumped 46% from November to December 2015, the Office of National Statistics found.

    The increase in fares was the highest since 2002.

    The "highly variable" changes were a result of increased consumer demand for air travel, the ONS said.

    In America, air passengers were more likely to benefit from tumbling costs - airfares there were lower throughout most of last year.
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