Editor Note: Brought to you by the COGCW News Team is an excellent news article by Robert Morely from
the Trumpet Weekly that gives us an in-depth look at the factors behind the sudden drop in oil and gas prices
and the danger that it brings.
Saudi Arabia’s powerful oil minister made a very strange comment on December 22. He told the Middle East Economic Survey that it was “not in the interest of producers to cut their production, whatever the price is” (emphasis added throughout).
“Whether it goes down to $20 a barrel, $40, $50, $60, it is irrelevant,” the kingdom’s Oil Minister Ali al-Naimi said.
His odd comments come as the price of oil hits multiyear lows.
Since June, United States’ crude has cascaded from $107 per barrel to $56 per barrel. The sell-off in Brent Crude, the oil purchased by Europe and Asia, is even steeper. It has plummeted from $112 per barrel to $61. Just a few years ago, oil traded for $140 per barrel.
It is the third-sharpest decline in history, yet the Saudis seem to want it to go even lower. This is strange because the Organization of the Petroleum Exporting Countries () cartel was founded to do just the opposite—keep oil prices high by limiting supply.
Something smells rotten—and it isn’t the sulfurous crude bitumen produced by Canada’s oil sands.
So what are the Saudis up to? And how will it impact you?
The United States—the Good and Bad
It impacts you every time you head to the gas station. That is the good news. According to Citigroup, if these prices hold, the average family will save $1,150 over the course of the year.
The extra cash is an immediate boost for the economy. The U.S. Bureau of Labor Statistics () reported on December 22 that U.S. gross domestic product grew at a barn-burning 5 percent rate during the past quarter. This was the fastest growth since the economic crash in 2008. Even if the numbers provide a poor measure of the real economy, expect the Christmas shopping numbers to be good for retailers this year.
Yet there are also risks to America’s economy that did not exist in America just a few years ago.