While everyone is super stoked about low gas prices, I will take the time to explain why. In early September John Kerry met with Prince Abdullah of Saudi Arabia and set forth the policy of driving down oil prices manually through price manipulation. The purpose behind this is to weaken foreign economies that are dependent heavily on the export of oil. Namely Russia, Iran, and Venezuela because they along with China and others have challenged US hegemony in financial markets. Venezuela is a country with civil unrest and will likely be chaotic in the near future, as well as other fragile oil exporters. The problem with this is it will also cause a deflation in dollar prices, which will lead to higher interest rates, and slower economic growth, which may be risky given the recessions in the US and Europe. Also securities that are invested heavily into commodities will see losses. QE 4 may be the FEDs counter which would increase national debt. Coupled with that small oil and natural gas firms that have been growing with the boom in domestic energy production will be undercut and forced out of the market, benefitting large energy corporations. The purpose of this is to act as another piece to the economic war we have been engaged in with Asian countries for the past decade, of course there are always repercussions to market manipulation and we will see its effects over the next year, so enjoy that two dollar gas, it doesnt come without a price.
Posted on: Thu, 18 Dec 2014 10:26:44 +0000
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