HOOD'S PERSPECTIVE

The plummeting price of oil is still the biggest energy story in the world right now. It's bringing cheap gasoline to the United States while wreaking havoc on oil-producing countries like Russia and Venezuela but why is it bad news for Uganda. Let me try to explain 1. If the price of oil is too low, it will simply be left in the ground. The world badly needs oil for many purposes: to power its cars, to plant its fields, to operate its oil-powered irrigation pumps, and to act as a raw material for making many kinds of products, including medicines and fabrics. If the price of oil is too low, it will be left in the ground. With low oil prices, production may drop off rapidly. High price encourages more production and more substitutes; low price leads to a whole series of secondary effects (debt defaults resulting from deflation, job loss, collapse of oil exporters, loss of letters of credit needed for exports, bank failures) that indirectly lead to a much quicker decline i