Are you having a tough time understanding the price of oil right about now? Would you like to see why it is so important to you as a prepper? Because it is important you know…due to where it points the world is headed.
- You can see that oil consumption throughout the world has a nice very modest rise.
- You can see that US oil production is pretty much flat for the last the 1-1/2 years.
- But you can see the price of oil has tanked since early 2014.
OK, so those are the facts…no opinion, no BS, no one trying to forward their agenda…just facts.
We know that the price of oil is essentially controlled by 3 major factors;
So if the oil supply is pretty much stable in the US, the world consumption is rising very modestly, what would be causing the tanking of the price of oil?
Well, we check the global oil production figures…
That shows we can rule out an increase in supply/production as the driver in pushing the price of oil down. Actually, if you look at the global consumption going up modestly and the global oil production going down modestly we should be seeing the price of oil going up modestly. That trend would be based on historic oil price trends.
So what is left?
Yup, “speculation” of the future price of oil. And that speculation is based on what oil traders think the price will be based on near-term future global economic conditions. For you and I commonsense tells you that the global economy sucks, and is getting worse. But, let’s see if we can validate that…
So let’s look at the US stock market….
The US stock market is almost totally flat 2014 through today, but dropping significantly since the beginning of 2015. That indicates that investors are not confident in where the country is going economically because the companies behind the stocks are ot doing as well, or will do as well, as investors would like to see.
So far that is the two largest stock markets and economies in the world doing horribly…for the last 1-1/2 years.
And finally let’s take a look at the “fear index” in the US…
Not only an overall rise in “fear” since mid-2014, but a dramatic spike in 2015. And up significantly in 2016 so far. This shows that investors are very concerned (fear) with what is happening in the US economy and stock markets.
Put all this fact-based information together and you can see that there is a decrease in supply of oil, no decrease at all in the demand for oil. Those two factors should actually move the price of oil higher, but it hasn’t. And that leaves me to worry about what is really happening.
So that leaves only one last major factor driving the price of oil…speculators looking at the economic future and seeing a woeful economic present and a worsening economic future. And not just bad economic future here in the United States, but everywhere in the economic world.
When oil-based economies become desperate for more national revenue there is only one option – drive up the price of oil. There are only two options for that; 1) cut back the supply, 2) improve the global economic near-term future. And the only way to cut back supply is to reduce the pumping capacity or reducing the amount of oil reaching the market. That is done voluntarily at the well-head reducing pumping capacity, or through war reducing oil that reaches the market.
I have no crystal ball…but I don’t see a good way out of this anytime soon. As a prepper, you are in a good place. If you can, get in a better place with your preps. But, mostly I want you to be aware of what is really going on. You Situational Awareness is important to me.
2016 Copyright © AHTrimble.com ~ All rights reserved No reproduction or other use of this content without expressed written permission from AHTrimble.com See Content Use Policy for more information.