Fear is what has been driving stock markets to recently crash. Why? Because of plunging oil prices and China’s falling economy. Saudi Arabia is determined to control the world’s oil prices so refuses to reduce its pumping in the hope of putting other types of energy companies out of business.
Oil prices have plunged from US$110 per barrel to a low of US$26.19 a barrel. This is destabilising for the world economy. It has caused stress in the credit market as oil is tied to many products.
A massive oil slick in the Gulf of Mexico has now hit several US state coastlines. The slick has been caused by a leaking oil pipeline. It follows a huge explosion aboard the BP (British Petroleum) operated Deepwater Horizon oil rig in the Gulf of Mexico.
The rig sank on April 22, two days after a huge explosion that killed 11 workers. US President Barack Obama has flown down to see for himself exactly how bad the spill is and to meet the boss of BP. The US President puts the blame firmly on the shoulders of BP who he says will be held personally responsible.
Choppy seas and strong winds have so far hampered the clean-up operation. BP has been severely criticised for under estimating the scale of the crisis. The sheer size of the oil spill threatens the very way of life for people all along the shorelines of Louisiana, Alabama, Mississippi and Florida. The US state of Louisiana has been hit the hardest, which itself is still battling to recover after hurricane Katrina hit the area in 2005.