Vladimir Putin protests that $80 barrels of oil will sink the world economy. It appears the Russian president does not understand elementary economics. Every Economics 101 textbook teaches that falling energy prices reduce the costs of output and raise employment. Did he not notice the world recessions associated with the energy crises of the 1970s and early 1980?
Of course, oil producers like Russia are not happy as their export earnings fall and their government revenues shrink, but the world economy as a whole is a major beneficiary. We do not yet know how much of the U.S recovery is due to falling oil and natural gas prices — but it certainly aids rather than encumbers economic growth. A drop in oil prices may spell trouble for Putin’s dictatorship, but that’s just one more reason for the West to rejoice.