"By Joellen Perry
$190 billion for the U.S., $170 billion for the euro zone and $66 billion for China: That’s how much the world’s big oil-importing countries stand to gain in net savings from the 60% slide in oil prices since last July, according to the European Central Bank.
In its monthly bulletin for May, the ECB trots out four scenarios of how the oil-price fall could impact net savings in the U.S., the euro zone and China. Each assumes oil prices stay around $50 a barrel and considers two factors.
First, the volume of oil imports: The net savings boost is biggest if countries import just as much at $50 a barrel as they did when prices were more than double that. That’s unlikely, because oil-producing countries will probably buy fewer exported goods as oil prices fall.
So the ECB estimates that oil-importing countries, facing a falloff in demand for their exports, are likely to lower their own demand for oil imports in response. That yields smaller, but still significant, net savings: Up to $179 billion for the U.S., $134 billion for the euro zone and $51 billion for China.
In the worst-case scenario, where the reduction in oil imports matches the oil-producing countries’ lost revenues exactly, economies that export a lot to oil-producing countries take a hit. The euro zone and China — both of which exported more to oil producers in 2007 than the US did — would see negative net savings, of -$22 billion and -$12 billion respectively. The ECB calls that scenario “highly unlikely.”
More likely, the ECB concludes: “The net savings of oil-importing countries are likely to be substantial.”