oil prices
16th Dec

Fuel Riptide, the Russian Interest Rate and the World Economy

Cost of fuel has dropped by 45% and that is good, right?

oil pricesLower gas prices are good for an economy when they drop slowly. It is sort of like losing weight, if you drop a lot of weight quickly it can have a negative effect on the body. Losing weight slowly, like a couple of pounds a week means you have made lifestyle choices that are healthy and more lasting.

Lowering crude oil prices by 45% in a few months can act as a riptide before a tsunami. That is what is happening on the global market. The same thing happened in the months before the calamity of 2008. A massive drop in the cost of crude oil is a barometer for the economy.

Another sign is that Russia’s central bank raised its benchmark interest rate the most since the nation’s 1998 default, making the announcement in the middle of the night in Moscow as policy makers seek to douse investor panic and stem a ruble rout.

The Russian central bank increased the key rate to 17 percent from 10.5 percent effective today, it said in a statement on its website. A number of factors have converged to put downward pressure on emerging markets. Global oil prices continued to tumble, exacerbating problems for oil-exporting countries like Russia and Colombia.

The effect is being felt in the United States as well. Stock prices dropped Friday and Monday due the price of oil and the Federal Reserve is going to make an announcement Wednesday which may indicate a rise in interest rates.

Many investors are concerned that although lower oil prices can be good for American businesses, it can also be an indicator of slowing demand worldwide.

Instability in the oil market means that local US economies that are depending on oil jobs may see a pullback in new wells being dug and the number of people hired. States like Texas and North Dakota whose economies have survived the great recession will be hardest hit.

For you and I it may seem a good thing to pay less than $2 for a gallon of gas, and it is for now. But it is a question of stability in the economy. A sharp drop in the price of anything will create the opportunity for over correction in supply and demand which in turn allows weaknesses to be exposed.

From a biblical perspective the world and specifically America has been warned for some time now that we are on a dangerous path. America has been given a series of warnings beginning on 09/11/2001 to turn from our wickedness and return to the Lord. We have been unwilling to listen.

I believe that we are in the final months of the last warning. We are currently in the middle of the shemitah year and the third of the four blood moons awaits us at Passover. What we now witness is the warbling of an increasingly unstable economy.

The question remains, does anyone have an ear to hear what the Spirit is saying.