Commodity Prices

As prices of various commodities fall, many resource-rich countries are facing increasingly difficult choices. This series of articles, by NRGI experts and the organization’s partners, explores specific challenges in different contexts, as well as the solutions open to countries facing lowered investment, reduced government revenues, and increasing deficits. The series kicked off in February 2015, when the Financial Times’ BeyondBRICs blog published our overview piece.

Wherever possible, we discuss where opportunities lie to improve economic management, rationalize resource-based development, improve public understanding of extractive industries, and jump-start governance reform. If you have feedback on the ideas expressed in the pieces below, please feel free to contact Thomas Lassourd (tlassourd@resourcegovernance.org) and David Manley (dmanley@resourcegovernance.org).

Ten Consequences of Lower Commodity Prices for Resource-Rich Countries

In a recent post on the Financial Times BeyondBRICs blog, NRGI authors Thomas Lassourd and David Manley describe ten consequences of lower oil and metal prices for resource-rich countries. Read the whole post here.

Low Oil Prices: Mixed Impact in Tanzania

The large fall in the price of oil since mid-2014 is on the whole good news for Tanzania, which is a net importer of oil. Indeed, Tanzanian stocks are around 40 percent higher than when oil prices began falling from a peak of $115 a barrel on June 19 last year...

Answering Questions About the Commodity Slump: A Summary from the 2015 NRGI Conference

To contribute current thinking about the risks and opportunities presented by the current commodities downturn, NRGI gathered more than 180 experts for two days of discussion at St. Catherine’s College, Oxford, in June 2015. This conference summary paper addresses key questions and assays some answers.

Falling Prices Accentuate Structural Weaknesses in Venezuela

When we think about the “resource curse,” one oft-cited example is oil-rich Venezuela. Despite copious petroleum reserves, people in one of Latin America's top hydrocarbon producers queue for hours outside supermarkets to buy staple foods, and now cite food shortages as a bigger concern than crime.

Cheap Oil Comes with Pros and Cons for Tunisia and Egypt

During the oil boom years earlier this decade, rising petroleum subsidies in importing countries such as Tunisia and Egypt were a constant strain on budgets—and so the collapse in oil prices has produced nuanced challenges for state-owned oil enterprises (SOEs) in both countries.

New Producers Must Manage Great Expectations in a Time of Low Oil and Gas Prices

Managing public expectations is one of the toughest challenges that governments face now that commodity prices have dramatically declined. A gathering earlier this month in Tanzania brought together public officials from 15 emerging producers to discuss the implications of the price drop on their strategies.

Why Weren't Governments Better Prepared for the Commodity Price Crash?

Headlines about resource-rich economies faltering under crashing commodity price pressures fill the news. "Venezuela in a bind as Nicolas Maduro faces default dilemma" warns the Financial Times. "Alberta premier considers sales tax to fix ailing, oil-based economy" says the Canadian Press. "Iran says it can no longer afford Ahmadinejad's cash handouts" reports the Guardian...

Securing Gas-Driven Gains: How Can Bolivia Stay Out of Commodity Price Troubles?

On 20 April, Luis Arce Catacora, Bolivia’s economy minister, spoke at the University of Chicago, about “The Model That Changed Bolivia's Economy,” which, he said, explains how Bolivia has been able to sustain a five percent annual economic growth rate over the last decade.

Watch the 2015 Natural Resource Governance Institute Conference Session Videos

This year's conference focused on the implications of falling commodity prices, bringing together policy makers, practitioners, academics and other leading experts (including many from developing countries) to discuss the salient policy and governance challenges and the latest analysis on these issues.

Rio Tinto, Mongolia, and the Art of Negotiating Amidst Price

VolatilityNegotiating complex mining deals can be challenging for resource-dependent countries under any circumstances. But commodity price volatility adds an additional challenge to the mix, as Mongolia's recently concluded renegotiation with Rio Tinto on the Oyu Tolgoi project illustrates.

A Taxing Question Arises When Commodity Prices Fall

At the end of the last commodity super cycle in the mid-1980s, the future looked bleak for producing countries. The Prebisch-Singer hypothesis suggested that commodity prices would continue falling relative to the price of manufactured goods – which was not good for countries that were selling their resources in order to finance industrial expansion.

Resource Resilience: How to Break the Commodities Cycle

Columbia Center on Sustainable Investment (CCSI) experts Lisa Sachs and Nicolas Maennling discuss public policies, from managing resource revenues to diversifying the economy, that can help countries reduce dependency on extractive industries and prosper through volatile commodity cycles.

Lower Oil Prices: An Opportunity for Oil and Gas Companies

Guest author Dr. Carole Nakhle analyzes the shifting bargaining power of companies and governments under current price developments and how many companies are taking advantage of the situation to improve their fiscal terms. This bears lessons for policy makers and all interested stakeholders.

Low Oil Prices Impose Difficult Choices in Uganda

Uganda's Ministry of Energy and Mineral Development (PEPD) recently extended the deadline for firms to submit bids in its first-ever round of licensing for six oil blocks in the Albertine Graben...

Petroleum Pulls the Purse Strings: Implications of Low Oil Prices for the Nigerian Economy

The price of oil, the commodity that more than any other determines the fortunes of Nigeria, has fallen over 50 percent since June 2014. The country’s 37 billion barrels of oil reserves are now significantly less valuable than before.

Falling Oil Prices Expose Ghana's Governance Challenges

In the latter part of 2014 global oil prices fell at one of the most rapid paces in history. In Ghana this exposed a precarious fiscal situation that has undermined the high ambitions expressed by Ghanaians just a few years ago. Countries like Uganda and Tanzania that are currently shaping policies and laws to manage “resource curse” pressures can surely learn from Ghana’s troubling experience.

The Miracle That Became a Debacle: Iron Ore in Sierra Leone

NRGI economic analyst David Mihalyi analyzes the inherent uncertainty in mineral prices, and discusses how overoptimistic forecasts can complicate fiscal policy and managing popular expectations.

Watch the Video "Falling Commodity Prices, Rising Tensions" Featuring Sir Paul Collier and NRGI President Daniel Kaufmann

"Cheap oil: Who are the winners and losers in Africa?” "Oil slump to help Indonesian President Widodo in subsidy cut.” “Nigeria lowers petrol price as elections near." These headlines informed a public panel that took place on Monday, April 13, at Central European University.

Indonesia: Lower Oil Prices Create Challenges, Opportunities for Government

NRGI experts Emmanuel Bria and Patrick Heller discuss in a Jakarta Post column how lower oil prices will affect the Indonesian economy and the new government’s ability to pursue reform in the petroleum sector.

The Time is Now for Addressing Resource Governance Challenges in Latin America

Countries like Chile, Colombia, Mexico and Peru are among the resource-rich economies in Latin America that have made inroads their extractive sectors, particularly regarding transparency in revenues. Others, like Venezuela, that are embroiled in major economic crises illustrate...