Who would have thought that the price of gasoline would be so low in December 2014.   As of this writing oil prices are around $57 a barrel; whereas in August of 2013 it was over $100 a barrel. This time last year to fill up the tank of your car was excruciatingly painful, what has changed? Have there been new discoveries of massive oil reserves? Have the major oil company executives decided  that they have made enough money and chosen to forego their bonuses as a good deed to humanity?

Wishful thinking. The truth is none of the above scenarios are remotely true; in fact the  price of oil/gas is so low because there is a price war going on between oil-producing nations that stand on different sides of the political divide.  The United States along with its allies in Saudi Arabia are trying to weaken the economy of a resurgent Russia that is heavily dependent on its oil exports to sustain its economic growth as well as crippling the economy of Iran, Venezuela and anyone else who has a strong oil export based economy that  has a different political and philosophical outlook than that of the US and her NATO allies.

Not to make a value judgment as to whether there is merit in trying to under price your perceived competition in order to corner the market and perhaps put them out of business; however is this a business game that super powers should play? The stakes are much higher than McDonald’s adding more items to the dollar menu to grab market share from Burger King and Wendy’s; as all the latter can do is try to reduce the prices of their burgers or fries to compete. In the big scheme of things burger wars are relatively harmless to the rest of humanity (though some environmentalist may differ) you get the point.

By artificially dropping the prices of Oil and then imposing sanctions on Russia; exactly what did the US think was going to be the response?  Is Russia feeling pain? Absolutely; the ruble is free fall however; Russia’s counter was to halt food imports from several of America’s European allies; who depend heavily on the Russian market for the well-being of a number of their industries.

Additionally the US was taking the lead in what was emerging as the shale oil revolution potentially allowing the US to surpass the Saudis as the world leader in oil production however the price point that makes continued investment in shale exploration as an attractive alternative to traditional oil is 100+ dollars a barrel.  When oil prices drop below $100 a barrel it becomes increasingly difficult to justify the investment in shale exploration.  Now with oil prices down to $57 dollars a barrel it has put the whole shale industry in major trouble.

If shale oil production was going to be the linchpin in the US plan to become the dominant player in world oil she may have shot herself in the foot. As best-selling author and strategic risk consultant F. William Engdahl writes in an article titled : “Oil War on Russia: Ridiculous People and Unintended Consequences”
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The execution of the oil collapse has so far been technically flawless. Oil prices on average have plummeted almost 30% since September. The only problem is that the power-addicted Oligarchs and their ridiculous neo-con hired thinkers overlooked the fact that, in the process, they would bankrupt their very vulnerable shale oil bonanza.

For the past several years, the United States Government has bought on to the shale oil bonanza myth. It has shaped US foreign policy decisions, given people in Washington the false illusion they can risk blowing up much of the world’s Middle East without threatening global oil supplies, or Ukraine, because The United States of America is becoming the New Saudi Arabia.

But now the knife cuts the other way. John Kerry’s brilliant Saudi plan is being used by those same Saudis, not only to bring Russia to her knees, which it hasn’t managed to do. It is being used by the Old Saudi Arabia to cripple the shale oil basis of the New Saudi Arabia. The Saudis clearly, as was seen in the recent OPEC meeting, want to burst the US shale oil bubble in order to reassert control of the Old Saudi Arabia over world oil markets.

Submitted by Christopher A. Clarke on 12/24/14. 

Christopher A. Clarke is managing editor of Black2020.Com and can be reached through the sites contact page.