How Too Much Gasoline Brings Trouble

Now we have so much gas that trucks using more gas than cars are out-selling cars in America by the widest margin since 2005. Surging supplies and declining demand in Asia and Europe coupled with a stronger dollar have the price of crude oil sinking well under $50 a barrel. That price represents a 48 percent drop in 2014. Some experts predict if the price falls to $39 a barrel it will likely fall subsequently to $30. This dramatic drop in price has oil giant BP (British Petroleum) announcing job cuts at the company’s North Sea operation this week.

Even as the regular guy or gal who drives their car to and from work is enjoying the lower cost of gas at the pump, plummeting gas prices have real potential to cause havoc reaching global proportions. According to Bloomberg and Citigroup Inc., cheaper fuel “could aggravate political tension by squeezing government revenue and social benefits, Citigroup Inc. analysts said in a Jan. 5 report” (“How $50 Oil Changes Almost Everything,” Bloomberg.com, January 7, 2015).

The Russian economy, if current trends prevail, is expected to shrink by almost five percent if oil prices for 2015 average $60 a barrel. Half of Russia’s government revenues come from energy exports. Further plunge will see the selloff of the Russian ruble, which already fell some 46 percent last year. This is the ruble’s worst performance since 1998, when Russia defaulted on local debt. As the ruble collapses, the Central Bank of the Russian Federation has wasted no time imposing an economy choking interest rate hike to 17 percent, which has consequently sparked big increases in consumer prices. Such a blow to its economy, if left unchecked, could cause Russia to take on the characteristics of a wounded bear.

Current President Hassan Rouhani of Iran was elected on his promise of national prosperity. This promise, however, was based on $72-a-barrel crude—not the current $46.25-a-barrel the market closed at on Thursday, January 15, 2015.

Falling oil prices through 2014 caused a contraction of Venezuela’s economy, generating concerns the government could default on its foreign bonds. President Nicolas Maduro told his government to slash the budget even further, which will only add to current social unrest as government programs dry up and disappear. Meanwhile, Saudi Arabia is effectively blocking the cries of poorer members of the OPEC oil exporters to cut production and stop the free fall in global prices.

The Islamic State, without cash reserves, is likely to become hurt worse economically and militarily than conventional oil reliant countries. This translates to change of focus and nature of IS’s terrorist operations. IS will likely turn to other long-used cash generating methods such as extortion and organized crime to make ends meet. It is interesting to note that because IS’s oil came from captured regions of Syria and Iraq, their oil had no legal title. Without a legal title the IS oil has to be sold on the black market at severely discounted prices.

There is likely to be further and broader negative effects if the collapse in the price of crude oil continues as predicted. The negative effects will come in the form of rising social tension and unrest, say experts, especially in countries where oil keeps economies afloat.

The good news is that the ordinary Joe driving to and from work each day is enjoying a market that is oversupplied by a million barrels of oil a day. The Bank of America Merrill Lynch estimates oil prices will fall an additional 30 percent to an unbelievable $35-a-barrell, with option trades predicting the bottom to hit somewhere around $20.

If you would like to follow not only the current global trends of oil, but also of religion, agriculture, governments, military, health and more then be sure to read of the current “News and Prophecy” published by Tomorrow’s World.