Falling Oil Prices Greasing the Skids to War

While most are happy with lower gas prices,  they will eventually cause the former Soviet Union’s economy to crash, leading to a world-wide depression, then war.

A year ago, Russia’s economy was growing by about one-and-a-half percent and President Vladimir Putin was preparing to host the Sochi Winter Olympics. A year later, the ruble has lost nearly 50-percent against the U.S. dollar and Russia’s central bank has hiked its key interest rate for a sixth time to 17-percent.

Russia meets about 30 percent of Europe’s gas demand, mostly under long-term contracts linked to oil. However, Russian gas flows to Europe has fallen by 25 percent.

Europe’s biggest gas-consuming nations, Germany and the United Kingdom, have had mild winter this year, lessening the need for heating fuel. Also, gas usage in eight European Union nations, accounting for 63 percent of consumption, has fallen by 11-percent this year.

Because of the falling prices at U.S. gas pumps, you can expect price reductions elsewhere in the market followed by a deflationary economy.

In the 1930’s the U.S. experienced broad and persistent deflation. It was only the onset of World War II that shocked the economy out of deflationary expectations.

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