Crude now costs 57. Just a couple of months ago that same 42 gallons cost 106. If you drive a lot it was like getting a raise. If youre a corporate or National Income based on how much you can get for that barrel, yo you just got a raise. With Christmas Shopping americans. Im glad it keeps going down. We have enough insurance, and everything we have to take care of, gas is the least of our worries. In the last six months oil prices have dropped 35 . When oil was down 80 a barrel, we asked our guests how low oil could go before we should start to worry. Are there best cases and worst cases we should be looking at over the next year or two. Goldman sachs is at 70 a barrel all next year. One of the things that we never do on a show is predict. But i would say lower. Lower than 70. Yes. The lowest since 2009, its about the law of supply and demand. There is too much supply, and prices have continued to fall since saudi arabia convinced opec to keep pumping at current levels rather than cut back production. We have a decent price, now price decline, it does not mean that we should really rush and do something. We have to wait and see how the market will settle. Dropping prices under cut iran and russia, both rely on Higher Oil Prices to fund government. Russian president Vladimir Putin is playing down the opec decision as no big deal. For us, from the beginning it was clear once opec did not announce a reduction in production, the prices would reacts to it. That they would be slightly lower. But its estimated that russia needs the price of oil to hover around 100 a barrel to pay its bills, add the bite of sanctions and russians are hurting. This is all hitting our suspects, of course, everyone has some sort of debt, mortgage and all that. I think it will have a strong impact on ordinary citizens. Iran needs prices at 100 a barrel, too. Its currency has dropped by 6 against the dollar against opec announced it wont be cutting production. Irans president called the move treacherous. The people of iran and people around the region will not forget such treacheries in the muslim world. It will remain in the minds of the people, and they will react to it. Opecs decision could be seen as a political jab as two nations. Other gulf nations are supporters of Syrian Opposition in the countrys civil war. And remember its not just middle east wells creating a world market awash in oil, north american shale is also feeling the glut. U. S. Production is the highest in three decades as the worlds economy close, demand falls and downward price pressure continues for now the world pain is your gain at the pump. Are you falling in love with cheap oil . Over the next while what could possibly go wrong . We look at the joys and threats of really cheap oil moving forward. Joining us, professor of International Finance and business at the George Washington university. International oil consultant. Executive director of energy and sustainability at the university of californiadavis. Since you guessed below 70, you got to come back. Here we are. Today the price in the Mercantile Exchange bounced at 55. 87 a barrel. What is driving it further . If people are entering the marketplace and trying to guess at a marketclearing price, what forces it lower and lower . Well, in the short run its the saudis. The saudis have of enough of u. S. Expansion. This is their venue to curtail it. And there is panic in the market. There are many financial models for oil exporters. Those who have taken out loans that have to be paid back sooner than later are panicking, and theyre driving the price further down. Thats part of it. Is that why nobody could bear to turn down the taps, why they have to keep pumping even whe when the commodity itself is getting cheaper and cheaper . Well, lets first agree that opec has taken the wrong decision by not cutting its production by at least 2 Million Barrels a day to absorb the glut in the market. Had they taken that decision russia would have joined them by cutting half a million barrel a day, and mexico would have joined them by cutting 300,000 barrels a day. They would have been able, with the total of 2. 8 Million Barrels a day cut to absorb the glut in the market. However, this has not been taken. It is not too late for opec to reverse its decision, and to take a decision to cut the production by a minimum, and i say a minimum, 2 Million Barrels because they have been overproducing by that amount. It they take that decision, i think they will stabilize the oil price. Otherwise, im afraid the oil price could even reach 50 a barrel. Although that might be good enough for drivers and for transport for a short while, it will be of desire sequences to the Global Economy. Amy meyers jaffey. You injured heard them talk about how it would have been in the interest of these countries to cut production, but is it harder than we realize to do it . Ecuador, one of the opec members s not in great financial you shape. Nigeria is constantly battling fiscal problems inside the country. Venezuela also in perilous economic state. Is it difficult to say were just going defer this income for now and hopefully make it back down the road . Well, i disagree. I think that what is not well understood throughout opec is just how resilient the u. S. Production surge really is. In my opinion had opec made some production cuts over time all that would have done is encourage more and more drilling in the United States and other parts of north america. The shale boom is becoming more and more productive. Companies are able to produce more ail from the same well using new and better processes. More sand, different kinds of fracking fluids, and so its going to be very hard for opec to really compete against and shut in the u. S. Production, and the markets, you know, experts and traders in the market understand that, and thats why prices keep falling. People keep revising their ideas of how low a price will cause a slow down in the boom. Some are expecting the production in january to be the same in december in the United States, and i think it will be pretty hard for opec to knock out that production. Since everybody in opec has financial pressures, what is the point of cutting production if it means that youll just have prices stay more and the United States will get more of the market share. I think opec has painted itself in the corner by Holding Prices so high so long and creating this drag on the Global Economy, that it will be very hard for the organization to dig itself out. Conversely, you heard the model if the prices had gone on, it boo have encouraged u. S. Production to go up. Actually, youre right. In this business of oil its very simple. When oil prices go this low, right t drives the weakest out of the market. Then the middle group puts everything on hold, they most ball their production. Saudi arabia is really the only country out there who can with stand this. They have 7 billion in reserves. They can handle 55 a barrel for quite some time. Why the gloom . Im not sure who i should best turn this one to because everyone is agreeing to a degree on why its happening and whats happening, but why the gloom from economists who see bad portence in these Market Trends . Amy . You do have this risk in the markets back to the Global Banking sector. I think that people are pretty much assuming that venezuela might be one of the first shoes to drop in terms of having difficulty of paying back its debt. Of course, they owe a lot of debt to china, and maybe the chinese can afford to weigh off that debt. But you have smallproducing countries that have similar financial pressures. In balance i have to disagree when you look around the world, i mean, there are a lot of poorer countries in Southeast Asia and africa, that are helped when the fuel costs come down, the pressure on their budgets is alleviated. So i think its a mixed bag, and i think the interesting thing that we have not discussed is one of the things that really threw the market into a tailspin was a the thought that the chinese marke economy was going to slow down. Their organization, construction boom and Economic Activity has been a big driver to commodit ies drivers across the board, but especially oil. The question is will oil prices stimulate more growth or not . Go ahead, sir. May i comment on this . Please. The Global Economy cannot reconcile itself with such low prices. Although, contrary to common wisdom that very low oil prices are good for the Global Economy, i do not believe for one minute that is the case. Because low oil prices damage a Global Investment in many fields including oil and energy. Second, it undermines the u. S. Shale oil production. Third, it damages very much the Global Oil Industry itself. Weve seen that the top seven oil majors are already selling many of their production assets, and reducing their investment. This in twoyears time will shape the production of the global oil production. You this means that this production puts a very solid floor on the oil prices, and eventually it will push the oil prices up. Of course, we have also the damage to the gulfarab gulf economies, and iran and russia. When you put all of this combination together it is damaging for the Global Economy, and believe me, oil prices put plans in the next two years with prices hitting more than 100 to 150 a barrel. Well be back with more on inside story. When we return the knockon effects of cheap oil. When oil fell below 100 a barrel, stock markets began to sag. Why did that happen . Arent there plenty of winners in industry, too . Stay with us. Were back with inside story on al jazeera america. Im ray suarez. Were looking at the plunging price of crude oil at this time on the program. Youve already seen the effects when gassing up your car. Other effects for instance, the price of a plane ticket may take long for see. Were told russia has reserves that keep the worst pain at arms length there. How long until president putin can no longer mask revenue shortfalls. How do time horizons extend the party of the winners and deepen the gloom of the losers . Still with us our guests. There are buyers headed to the marketplace to sign up for contracts that have times on them, 30 clas 30 days, 60 days, 90 days. What would you advise them as they start their picks for the future . Would you please repeat the question. It was not very clear. There are a lot of active future markets. If they called you for advise, what would you tell them about three, six, nine months down the road . I would go and tell them to buy shares in the Oil Companies, and in the oil business because the prices will rebound and the price of oil will prove most if not all of its losses by the first or Second Quarter of next year. I am very convinced, as i said, that the Global Oil Market cannot tolerate such low oil prices, and thats why my advice will be go ahead. The future is for oil, and oil will be with us all through the 21st century. And it will have some big leaps in coming years. So my advice, go ahead and invest in oil, at least in oil shares because the prices will go up. Amy meyers jaffey, what if youre making tires or a petroleumbased consumer goods or plastics, what should you be doing . Should you be locking up supply now to hedge against rises in crude oil in the coming months . I think its too early for them to lock in this price. I can see the price go a lot lower. I think well see more ge geopolitical blinking before we assume that the prices are going to go back up. We need to see what is going to happen with the economy in china. I think its too soon for consumers to step in. I think we should sit back and relax, and i think it will be a year or so unless something changes geopolitically before we see a reversal in the downward trend in prices. Last time you were your chriscal ball was well focused. How should people who do business be regarding the next six months, a year. Ill give you the next four or five years, low. Really . Why do you say that . Because of the supply in the market. Fracking costs are still high. Theyre unknown and it changes daytoday but theyre relatively higher than whats happening in saudi arabia. Its very easy to take oil out of the ground. In some areas its 10 a barrel. Whereas facing is 70 to 80 a barrel. Will that spur more growth in the u. S. Economy . You were saying we dont get such a big push on the gas pedal from that. We do. The people who are going to be hurt are Oil Companies and oil producers. Renewable n are going to be hurt. But its a good to have oil price this is low at this stage of the game. The Global Recovery is not happening as fast as we want it to do. As long as the Global Recovery is happening we want oil prices to be low. That brings us to thebled of this edition of inside story. The program may be over, but the conversation continues. We want to hear what you think about the issues raised on todays show. Log on to our facebook page. Send us your thoughts on twitt twitter. Well see you next time in washington, im ray suarez. Im tony harris. Coming up at 6 00 p. M. Eastern on al jazeera america. Sydney under siege. Two hostages and the gunman killed after a 16hour stand off. Now we mow more about the gunman and what may have motivated families of the shooting against the rifle maker that killed 20 children and six adults. They say it never should have been on the market. We have that and more at 6 00. Were following a funeral cortege procession through the outskirts of baltimore. Kyndal staten was shot dead at his home in northeast baltimore. He was 27. Today his family and friends are burying him