The big oil bust of 2014 may be even bigger in 2015

Washington

SINCE mid-June, crude prices have dropped roughly 40 per cent, from US$115 a barrel for the Brent benchmark to about US$70 a barrel now. US petrol prices have fallen almost a dollar a gallon (3.79 litre), from US$3.63 in June to US$2.74 in early December. These declines signal a massive transfer of wealth from producers to consumers estimated at about US$1.5 trillion annually by economist Edward Yardeni. Although the full implications are hazy - in part because it's unclear where prices will settle - likely effects include a boost to the sluggish global economic recovery and political strains for some major exporters, including Nigeria, Venezuela, Russia and Iran.

Why is this happening? What does it mean? He…