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Gary Shilling

Will Oil Cause the Next Recession?

Falling crude prices could spark deflation.
Where's the bottom?

Where's the bottom?

Photographer: Luke Sharrett/Bloomberg

If oil prices take another dramatic slide, as I believe they will, who wins and who loses? And could plummeting oil prices sow the seeds of the next recession?

Oil-importing countries are obvious winners from falling crude prices. That includes the U.S., where -- despite a surge in domestic production -- imports still account for nearly 50 percent of petroleum consumption. The net oil-importing countries of western Europe and Asia also benefit from falling crude prices. India and Egypt, which subsidize domestic energy use, will surely benefit. Some of that, however, will be offset because crude oil is priced in U.S. dollars, and those countries' currencies have grown weaker against the greenback.