Decline in Oil Prices

The sharp decline in oil price is causing serious trouble for the oil producing
countries. The West Texas Intermediate, the grade of crude oil which is used as
a benchmark of universal standard of oil prices, has dropped from 117 to 45
dollars per barrel since July 2014.
This was caused by both a drop in world demand for oil and an increase in
supply. One of the biggest oil consuming countries, China, is slowing down its
economic growth. Economic depression in Japan, the USA, and Europe is making
the worlds demand for oil decrease. On the other hand, the USA has begun to
produce a large amount of shale gas. This change in the balance of demand and
supply is the biggest factor for this sharp drop in oil prices.
The drop in oil prices are welcomed by oil consuming countries, such as Japan,
China, and European countries where product manufacturing and transportation
costs have declined. This is leading to more profits for companies, and many
companies have decided to raise their wages from this April in Japan. There is
no wonder many people in these countries are wondering Is there anything to
worry about with this drop in oil prices?
On the other hand, the effect of this situation is nothing but harmful for all of
the oil producing countries.
My ideas
Is the drop temporary or permanent
I believe this drop in oil price shows a conflict between the USA and other oil
producing countries, especially Saudi Arabia and Russia. Shale gas produced by
the USA is an economic enemy for existing oil producers. Therefore, many
newspapers insist that OPEC, which is lead by Saudi Arabia, is maintaining their
oil production despite the drop in oil prices so that the price will drop even
more. This artificial decrease in oil price is likely to cause unprofitable situation
for the USA since shale gas requires high technology and cost for production.
This shows that this drop in oil price is a process of fair pricing in the
international oil market, therefore I believe that this drop is not temporary, but
permanent.
Isolation of Russia and empowerment of China
Russia has been politically isolated since the Crimean crises as the USA and
European countries applied strong sanctions against Russia. But now, Russia is
being economically isolated because of this sharp drop in oil prices. Russia
relies on energy incomes for more than 80% of their income and are now both
economically and politically isolated.
China has supported Russia, neglecting the worlds mood of anti-Russia since
the Crimean crises, and has made an agreement of importing 400 billion dollars
of natural gas from Russia.
I believe that this drop in oil gas will lead to a dramatic change in the power
balance between the USA, Russia, and China.