Oil appears to have settled around $80 per barrel for West Texas Intermediate crude, close to $20 below its 2013 and 2012 averages of $98 in each year. If this is to become a long-term level, then the lower oil prices will work through the global economy, producing both winners and losers. Our Global Income Edge Conservative Portfolio has little oil and gas exposure, and our main holding in the sector, Kinder Morgan, has maintained its value through the downturn in oil prices.  

 The U.S. is unlikely to feel much effect from the change. U.S. energy self-sufficiency has increased from 69% in 2005 to 84% in 2014, with most of that increase coming from greater production of natural gas. In oil alone, U.S. production covered 54% of consumption in 2013, according to BP’s June 2014 Statistical Review of World Energy, a figure that is rising fast. So the U.S. is still a beneficiary of lower prices, but not by as much as it was. The big danger arises if prices fall below $70 or so, in which case U.S. fracking of shale deposits becomes uneconomic and the rapid increase in U.S. self-sufficiency ends.

 For now, Canada and Mexico are clear losers from lower prices; both countries produce substantially more oil than they use.

Europe is the big winner from lower oil prices. France and Germany have almost no domestic oil production, while Italy’s oil production is less than 10% of its use. Britain is in a similar position to the U.S., with oil production 59% of consumption in 2013, but in Britain’s case production is currently declining as the North Sea oilfields age.  

 The Eurozone economy has been stagnant for several years, and has still to regain its 2008 highs. One of the reasons for this has been the stubbornly high level of oil prices, which is a considerable drag on the economies of non-oil producers. There’s no question that the Eurozone as a whole, and France, Germany and Italy in particular, are big winners from lower oil prices, as consumers are given more cash to spend and balance of payments positions improve.

 Africa and Latin America are both losers, on balance, from lower oil prices, although the impact differs among countries. Still, with Brazil producing 83% of its oil requirements, Venezuela and Colombia producing far more oil than they need and Argentina self-sufficient, only Peru and Chile of the investible economies are significant gainers from the change. And both of those countries have lost badly from lower minerals prices. Africa as a whole produces 244% of its oil consumption, although one of its leading economies, South Africa, has little oil production – but again loses by lower commodity prices.

 Russia and the Middle East are the big losers by lower oil prices and in Russia’s case could run into serious difficulties fairly quickly since most oil revenues run through the state and are quickly spent by Vladimir Putin’s military machine or embezzled by his cronies.

 Even Middle Eastern countries that don’t have oil will be losers, since there will be less money available from the oil producers to prop them up.

 Australia, which process 38% of its oil consumption, and China, which produces 41%, are both significant gainers from lower oil prices, while India, which produces 24% of its consumption, is a rather larger gainer, as is Philippines, which surprisingly produces little oil and Japan, which produces almost none.

 Regrettably, companies in Japan, a big winner from lower oil prices, pay rotten dividends, as do companies in India, where share prices have got rather over-excited in the wake of Narendra Modi’s May election victory. While the EU is decently dividend-oriented, France and Italy, two of the big winners from lower oil prices, have bloated government sectors and seem likely to suffer from any further Euro crisis (the likelihood of which is however somewhat lessened by the oil price decline).

 Income-oriented international investors should therefore look for ETFs paying decent dividends in countries benefiting from lower prices, or possibly consumer-oriented stocks in those countries.

 In Europe, I can suggest two alternatives. One is iShares MSCI Sweden ETF (NYSE: EWD), which I recently wrote about and which has a yield of 3.7%. Like most EU members, Sweden produces little oil, less than 5% of its needs, so is a big beneficiary of lower prices.

 Alternatively, if you want to buy one of Europe’s big beneficiaries and are prepared to compromise a little on yield I recommend the iShares MSCI Germany ETF (NYSE: EWG). The main disadvantage of this fund is its yield of only 2.3%, but on the other hand Germany is one of the biggest beneficiaries of lower oil prices, both directly and indirectly through its manufacture of powerful cars and other oil-guzzling machinery. The fund is trading on a P/E of only 14, and has an expense ratio of only 0.51%, so you’re not overpaying for it.