A reader recently emailed:
“I heard recently on the radio that some people believe that the radical Muslims will try to ruin our economy by getting oil up to 300 dollars a barrel. Have you heard anything about this?”
I don’t think radical Muslims have the power to do anything like that. Sure, a terrorist act can cause a temporary increase in oil prices, but the effect will be temporary and not near the magnitude you mentioned. The Muslim countries can influence the price of oil, if they all work together, because they control most of the oil production. But the Muslims for the most part are moderates who are as interested in keeping the dollar intact as we are, because they are getting the money=power anyway because they own the oil that everyone needs including China and India. The radicals are just too small and insignificant to bring about anything like what you mentioned. However, that won’t prevent many Americans from using them as scapegoats as this crisis continues to worsen. You can count on the politicians to use all sorts of scapegoats to get the attention away from the real guilty parties.
Oil prices will continue to go higher and higher. Yes, $200 and eventually even $300 oil is in our future. But it will probably have little or nothing to do with radical Muslims. Oil prices will continue to climb, but it will be due to the supply and demand fundamentals.
Back in 1956 geologists M. King Hubbert predicted that oil production in the U.S. would peak in the 1970’s. At the time the US was the world’s largest oil exporter and people thought Hubbert was crazy. Well, guess what happened in the 1970’s…Hubbert was right! Today, the US is the world’s biggest oil importer! Then, in about 1995 several analysts used Hubbert’s methods and predicted that world oil production would peak between 2004 and 2008. Again they were right! At a time when demand is growing (aided to a large extent by demand from developing economies such as China, India and Russia), world oil production is irreversibly declining.
The math is simple: Increasing demand and decreasing supply means higher prices. And the impending crisis will ultimately be far greater than almost anyone can imagine – some are even predicting a large depopulation of the Earth is in our future – as famine strikes as energy dependent agriculture suffers resulting in soaring food prices.
For those of us in the US, the problem will be compounded by a continually declining dollar, making energy prices even more acute for us than for those with currencies that are not declining as fast as the dollar. Add to that the foolishness of our politicians, who in their myopic idiocy have accelerated the decline of the dollar, and come up with such stupid ideas as burning our food (subsidizing ethanol production from corn) in a foolhardy attempt to help keep the tanks of our SUV’s full, while our grocery prices skyrocket. (In short, don’t expect the people who got you into a fix to be able to get you out of the fix.)
In any crisis, people will look for scapegoats. Wars over resources will be inevitable, many being started under the guise that it is somehow “their” fault. Don’t fall victim to the propaganda. It is simply supply and demand. How can you protect yourself? Buy precious metals, which in dire economic times will increase in value as the dollar collapses and inflation soars out of control.
Getting back to your question: Even it that were true about the radical Muslims, it would be but one drop in the bucket, because no one could do more damage to our economy than that already done by our congressmen – a 9 trillion dollar national debt, and 55+ trillion in unfunded liabilities, all because they stole the money that should have gone toward the social security “trust” fund. Our economy is irreversible headed toward collapse, with the total collapse of the dollar inevitable. That type of damage could only be done to ourselves by ourselves. In my opinion, there is no need for excessive fear over radical Muslims. The people to fear are in Washington, because as this crisis continues to unfold, they will continue to find scapegoats (which will lead to more wars – like Iraq) and reasons to curtail our freedoms, all under the guise of protecting us, as they slowly but surely dismantle the Constitution and build a larger Central Government. The thing I fear most is big government=socialism, and the kind of totalitarianism that Americans will be all too willing to tolerate and embrace when the crisis reaches its peak. I fear those in Washington far more than I fear anyone abroad.