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Low Gas Prices Linked To Paris

by John on 11/20/2015

I posted this photo of the ungodly good gas prices I get in nearby Myrtle Beach, SC at Costco.

Filling up the tank doesn’t take anything what it did a few years ago.

But I began to look at that photo a bit differently as I examined the root causes of the attacks in Paris.

The rise of ISIS, in part, is because of low gas prices here.

I am not making any political statement here. I am just pointing out the interesting cause and effects that have happened over the past few years that seem out of our control. My stand is this:

These factors are changing the world and making it interesting and chaotic:

  • An aging population is creating a drain on government revenues as more people retire and fewer people are in the workforce. Although we have a real problem in the next 10-to-15 years, countries like Russia, China, and Japan have it far worse.
  • The technology boom is making life easier for many of us but it is also eliminating many jobs. Part of that technology boom is shale oil.
  • Old line corporate industries are trying to control or defeat these new technologies.
  • US lawmakers are either unaware of these trends or they are being bought by the special interests, so we have not made changes to address these new trends.

The increase in shale oil production has flooded the oil market – dropping prices. The Saudis – with their glut of oil – have chosen to keep pumping the oil as well. The Saudi’s motives seem two-fold: drain Iran of cash; and possibly bankrupt US shale oil producers. The Saudi plan has seemed to work on Iran, but US shale oil producers, though squeezed, are finding ways to keep things going.

Ironically, the drop in oil prices has squeezed Iran, Russia, and the OPEC countries who have lost vast amounts of revenues. Those revenues were used to quell their citizens who had no jobs, no education, and no future. The lack of money combined with the lack of societal benefits led to the failed Arab Spring and to the rise of ISIS.

It’s no coincidence that the chaos over there started right around the time shale oil was beginning to boom here.

It is also no coincidence that ISIS moved their terror operations into Western Europe after US and western air attacks hit the ISIS oil distribution lines.

So how do we look at this?

First, what happens economically, in some ways, and especially with energy, has an effect or unintended consequence elsewhere.

Second, our growing energy independence will probably make us more isolationist. Peter Zeihan writes about it in his book The Accidental Superpower which I reviewed here.

Third, as we remove ourselves from the rest of the world, as cop, banker, or intermediary, there is an unintended consequence as Bret Stephens writes about in America In Retreat.

It’s a complicated world. And no matter how far away or safe we appear to be, the signs – in a gas pump too – are there.


 

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