The oil price collapse has filtered down to more money in your pocket, with Australian consumers already benefiting to the tune of $2 to $3 billion. Source: News Limited

The world now has far more liquid petroleum than it actually needs, and in our modern, energy driven society, any change to supply and demand of oil can up-end share markets, shut down multi-billion dollar hedge funds, slash government budgets and send countries into recession.

Growing claims that OPEC is effectively dead, and oil prices could tumble to $50 a barrel in 2015 — sitting at around $60 this week — are fuelling fears that it’s game over for black gold economies, including Russia and Venezuela.

PLUMMETING OIL PRICES: Flying could be cheaper in 2015

PLUNGING OIL PRICES: Share prices decimated

Already motorists are filling up for as little as $1.26 a litre in some states this week, and the NRMA expects the average petrol price to drop to $1.22 by the new year.

“We are going to see some bowser prices that we haven’t seen in a long time,” NRMA spokesman Peter Khoury says.

Some analysts predict that the oil may never recover, given the structural rather than cyclic drivers of its collapse which include more energy alternatives and OPEC’s refusal to reduce oil supply.

But Mr Khoury says a cold snap in the northern hemisphere or unrest in the middle east — both highly probable events — would propel prices back up.

CommSec chief economist Craig James says by Christmas, Australian consumers will have benefited to the tune of $2 to $3 billion.

“It’s clearly going to unleash spending power for consumers,” Mr James says.

Australian motorists are filling up their tanks for up to $10 less than they were six months ago. Source: News Corp Australia

Depressed oil prices are also making for sharply lower diesel and jet fuel, giving shippers and airlines a lift.

Flight Centre says travellers will benefit with slightly cheaper airfares. The travel group predicts average return airfares (excluding surcharges and taxes) to fall by just over 5 per cent next year.

Cargo rates are also tipped to slip by about 6 per cent.

But supermarket giants are unlikely to pass on savings to shoppers created by the freight factor. Like many of the major airlines and transport companies, grocery groups tend to keep the petrol rewards for their shareholders.

Any in-store grocery discounts would most likely be on popular perishables that are delivered daily, such as milk and bread.

Supply, demand and geopolitics help explain why the oil benchmark price has dropped nearly 40 per cent since June when it was $115 a barrel, says Tarun Dang, managing partner with Trend-Wise Capital Management.

“Continued growth in US shale production and an increase in non-OPEC countries oil exports have led to excess capacity,” Mr Dang says.

“The impact of this increased oil production is quite immense, that unlike in the past, geopolitical tensions have been unable to push oil prices higher.”

OPEC is refusing to slow production of supply as it attempts to muscle out US shale producers. Source: AFP

Yesterday, US crude fell below $60 a barrel for the first time in more than five years as OPEC cut its demand forecast to a 12-year low.

Meanwhile, the cartel refuses to slow production as it attempts to choke off US shale producers.

Australia is not immune to the oil swoon fallout. With lower prices, the federal Government will be forced to find more Budget savings to prevent a further blowout in the deficit, as its income from energy sectors dries up.

So if Aussie householder thought this year’s Budget was tough, it could get a lot worse.

There will also be pressure on state coffers.The majority of oil reserves are located off the coast of Western Australia, Queensland, the Northern Territory, Victoria and South Australia.

The oil crash is forecast to blow a multi-million dollar hole in the West Australian budget over the next three years.

Plunging oil price huge benefit to Australians ... Commsec chief economist Craig James. Source: Supplied

The Queensland government, which has had its revenues hit in recent years by a drop in coal prices, is also facing the prospect of lower than expected petroleum income.

Further afield, Russia’s economy has been pummelled, and the World Bank predicts it will shrink by at least 0.7 per cent in 2015.

In Venezuela where oil accounts for 95 per cent of export earnings, some experts say it’s game over. Already, government protests and heavy looting have flared in the wake of the poverty that the oil glut has created.

Similarly, a number of countries in Africa, and the Middle East, including Iran, Iraq and Syria will be starved of cash, with community anger expected to explode over the next few months.

On the upside, full-scale military ventures will be harder for terror group ISIS to maintain if it is denied oil cash.

World’s biggest oil producers

Russia

13.80 per cent (share of world)

Saudi Arabia

13.09 per cent

United States

12.23 per cent

China

5.15 per cent

Canada

4.54 per cent

Iran

4.14 per cent

Iraq

3.75 per cent

United Arab Emirates

3.32 per cent

Venezuela

3.56 per cent

Mexico

3.56 per cent

Kuwait

2.96 per cent

Brazil

3.05 per cent

Nigeria

2.62 per cent

Norway

2.79 per cent

Algeria

2.52 per cent