Downward Trending Crude Oil Prices: Good For The Global Economy?

Even though crude oil producing countries had voiced their “howls of derision” over plunging crude oil prices, but is downward trending crude oil prices good for the global economy? 

By: Ringo Bones 

Crude oil producing countries and multinational crude oil extraction companies had been complaining since the 2008 global credit crunch that if crude oil prices fall below 100 US dollars per barrel, there would be no economic incentive anymore for crude oil exploration and develop new finds. But most economists beg to differ that a downward trending crude oil prices will be good for the global economy and primarily benefits the developing economies. Both premises can’t be true, right? 

After Operation Desert Storm, economists around the world noticed that heavy crude oil dependent countries with still developing economies – like Bangladesh for example – experiences a 1 percent rise in GDP for every 10 US dollar per barrel fall in crude oil prices. Though why these countries haven’t moved away from crude oil may be blamed on conservative business think tanks in Capitol Hill making their economies more crude oil dependent every decade after Operation Desert Storm. 

During the start of 2014, crude oil was trading at 110 US dollars per barrel and by October 20, 2014, it was already down to 85 US dollars per barrel. Bond and hedge fund pundits are already predicting crude oil prices to fall to 70 US dollars per barrel before the end of 2014 while 50 US dollars a barrel crude oil prices is not out of the question during the first quarter of 2015. Would the Rockefeller Foundation moving away from crude oil sourced funding near the end of September be playing a part of this downward trending crude oil trading price? Who knows, at least downward trending crude oil prices  has a geopolitically advantageous effect of curbing the deleterious military adventurism plans of fascist-leaning crude oil producing states like Iran and the recent Vladimir Putin run Russia. 

Rockefeller Foundation Quitting Crude Oil: Not Economically Viable?

Some might see it as a cheap publicity ploy taking advantage in the wake of the upcoming UN Climate Change Summit but do we all benefit from the Rockefeller Foundation quitting crude oil?

By: Ringo Bones 

As someone who experienced the hardships that resulted from both Operation Desert Shield and Operation Desert Storm first hand, it seems that the Rockefeller Foundation suddenly deciding to quit their hedge fund funding from crude oil and other non-renewable fossil fuels almost cold turkey 23 years after Operation Desert Storm seems like a cheap publicity ploy taking advantage of the upcoming UN Climate Change Summit this September 23, 2014 and in the wake of the very recent Climate Change action demonstrations in New York City back in Sunday, September 21, 2014 that also took place almost simultaneously in other 160 countries like the UK, Afghanistan to Australia over world governments’ lack of action on tackling the root cause of climate change – i.e. excessive fossil fuel usage. If the Rockefeller Foundation – a charitable foundation largely funded by the big crude oil boom of the 20^th Century – quits crude oil and other non-renewable fossil fuels and switch to greener renewable energy sources, will it benefit the rest of us, the lowly 99-percent?

Given that the United States is now the world’s leading producer of crude oil – and it has been since the middle of January 2013 – America’s Big Oil heir, the Rockefeller Foundation - suddenly quitting crude oil almost cold turkey could send anyone beholden to Capitol Hill’s “Crude Oil Lobby” in a suicidal panic. Fortunately, it hasn’t, but to those in the know and who have no control whatsoever on how their pension funds are invested are now doubtful of the future of their pension funds now that the Rockefeller Foundation has quit crude oil, coal and other fossil fuel based hedge fund funding almost cold turkey. Will the Rockefeller Foundation quitting crude oil cold turkey prove to be not economically viable in the long run?

Crude Oil Industry: Still Economically Viable?

With a somewhat costly cleanup and huge compensation costs slated to be paid out by BP due to the Gulf of Mexico oil spill, is the crude oil extraction industry still economically viable?


By: Ringo Bones


With the Gulf of Mexico oil spill now on its 65th day - and counting, add to that calls for a boycott of BP products (like if that’s even possible), many now wonder whether the crude oil extraction industry is still economically viable. Oil industry experts say that it will probably take a hundred BP Gulf of Mexico sized oil spills occurring per year before safety concerns about offshore oil drilling get serious budgetary reconsideration in order to maintain profits - precipitous drop in share prices notwithstanding.

BP’s competitors – i.e. other oil companies – had accused BP of operating outside the industry’s norms when it comes to their safety budget. Case in point is the 1998 memo from London to their US subsidiaries ordering a 25% operation cost cutting measures that eventually compromised their operational safety. Unfortunately leading to the disastrous BP refinery explosion in Texas City back in March 23, 2005. Recent Capitol Hill grilling of BP had even uncovered safety concerns of a former Deep Horizon rig worker named Tyrone Benton being disregarded due to the company’s cost cutting measures.

When it comes to boycotting multi-national corporations who don’t know the meaning of corporate social responsibility – like BP – just skip filling up your car in BP affiliated gas stations. But when it comes to your where your pension fund is invested, it can be a bit harder because unless you have a very gifted hedge fund manager, it is very likely that your pension fund is invested in crude oil ETFs to maximize its rate of return. You know those crude oil companies that had been suspected for sometime of assassinating local environmentalists who are not very friendly with “big oil”. Economically viable or not, the true cost of oil extraction companies usually shows up on their impact to the environment and of the social stability in their sphere of operation – especially when other complications are now in the picture like former 9 / 11 victims relief fund chief David Feinberg now overseeing the 20 billion dollar BP Gulf of Mexico oil spill compensation fund.

Crude Oil-Based Economics: Still Economically Viable?

After the high energy prices of July 2008 has done it’s worst to our fragile global economy still reeling from the credit crunch, will the present under 115 dollar-per-barrel crude oil prices be a viable long-term solution?


By: Vanessa Uy


Now that the furor over high-energy prices has (hopefully?) died down, does this mean the worse of the energy crisis is now far behind us? Well, not exactly. The crude oil prices which are steadily declining (hopefully)on a weekly basis is by no means immune from the Machiavellian-like machinations of commodities speculators, less than democratic nation-states, and most of all OPEC.

Throughout of its 47-year history, the Organization of the Petroleum Exporting Countries or OPEC has been a cartel in name only. Given that the people who still care about OPEC’s historical track-record probably experienced first hand back in the time when gasoline was still sold at 10 US cents or 25 US cents per gallon, probably compares it to some post-Pablo Escobar narcotics cartel. Forever endangering the democratically elected governments of Latin American countries by financing local terror groups. The question now is, is OPEC really like a narcotics cartel devoid of any semblance of Corporate Social Responsibility?

Sadly, this was proven back in the March 2008 OPEC meeting in Vienna. OPEC member oil companies declined to increase their production quotas despite fairly legitimate reasons to do so. At this time, crude oil prices were teetering just above 100 US dollars a barrel. Plus, the United States is either near or already in an economic recession with much of the rest of the world feeling the knock-on effects. OPEC ministers were nonchalant despite of the dire situation of our global economy back then. The OPEC ministers even choose to a consensus of reducing overall production because the inevitable global economic slowdown will probably reduce crude oil demand anyway. Is there something wrong with this picture?

What is wrong is that a fall in crude oil prices is one of – if not the main – mechanisms in which an economic recession or retail slowdown corrects itself. As crude oil prices now a mere shadow, relatively speaking, of its almost 150 US dollar a barrel peak back in July 2008, the US economy did got a little better. Despite the housing market still at a slowdown, everyone at the US Federal Reserve must had patted themselves in the back for formulating a monetary policy that saved the US economy – i.e. it strengthened back the US dollar. But the question now is, can we keep crude oil prices under 100 US dollars a barrel until the year 2050 were economically viable alternatives to crude oil fueled systems will be invented?

The problem with this scenario is that replacement technologies for our crude oil incumbent industry will never be invented if the economic incentives for doing so are not there. Despite the environmental harm, not to mention the political instability plus the cost in human lives of our young people in their prime dying in some senseless war just to keep crude oil prices artificially low. Our Quixotic search for cheap crude oil is one of the main stumbling blocks for the development and implementation of environmentally renewable energy technologies like solar photovoltaic cells and wind turbines. Imagine if Halliburton and their ilk were around back during the days of the Amistad Case. The whole world would probably still be engaged in the Transatlantic slave trade and using whale blubber to run our cars, heat our homes, and generate electricity.

For the sake of the global economy, America – the world’s last true superpower – must take the lead in developing new technologies to free the whole world being shackled to a crude oil incumbent economy. Or are the policymakers on Capitol Hill too blind to see that America's addiction to foreign (especially OPEC’s) crude oil has made the US economy a virtual mendicant to every other country’s Sovereign Wealth Funds. Plus, the present US Government can’t even provide justice to the genocide victims in Darfur, Sudan because the US Government borrows money from one of the perpetrators – i.e. Beijing Government – just to buy America’s present crude oil needs from OPEC.

Hedging for Crude Oil: An Unfair Leverage?

Even though the latest peak price for crude oil is still a tad under $150 before retreating a bit, this wild price swing has already done its damage to the global economy. The question now is; is the blame – like the crude – still plentiful to go around?


By: Vanessa Uy


Many factors are supposedly blamed for our current middle of 2008 high price of crude oil. From simple supply depletion (we are using up our “known” oil reserves at a rate of 8% annually at our current rate of consumption), to the “supposedly” increased demand from newly emerging economic powerhouses like China and India. Add to that the perennial issue of Geopolitical Instability thus making all of us eternally gullible to the excuses of the crude oil conglomerates’ reasons for jacking-up their prices once again. As of late, economists around the world seem to have reached a consensus that at least 60% of our current price of crude oil is due to unregulated futures speculation by hedge funds, banks, and other financial institutions. Which Capitol Hill counters yet again with a counter blame pointed squarely at OPEC and our present “Geopolitical Instability” - courtesy of the Bush Administrations’ Neo-Conservatives, Halliburton, and their ilk.

Speculation of commodities’ prices – especially crude oil – is not new. It’s been around since Wall Street opened for business. But it is always viewed by many with suspicion because it’s as far removed as a self-policing corporate entity with enlightened self-interests as it can get. Hedge funds are used in unregulated futures speculation by banks and other financial institutions using the London International Commodities Exchange (ICE) Futures and the New York Mercantile Exchange (NYMEX) futures exchanges. Add to that the uncontrolled inter-bank or “Over – the - Counter” trading to avoid regulatory scrutiny. Thus making the US margin rules of the government’s Commodity Futures Trading Commission that allows speculators – via a regulatory loophole – to buy a crude oil futures contract on the NYMEX by just having to pay 6% of the value of the contract. The “somewhat questionable” margin rules had recently fed the skyrocketing crude oil price frenzy, especially if you consider the unfair 16 –to- 1 leverage, which left us – the average consumer – holding the bag. Sadly, government regulators around the world are powerless to address the “apparent” injustice.

Luckily, this extremely large leverage of 16-to-1 that had driven our current crude oil prices to wildly unrealistic levels have been a “Godsend” to various petroleum companies and various financial institutions whether these firms admit it or not. As of late, high crude oil prices had become a valuable tool for these firms to offset financial losses incurred since the September 11, 2001 terrorist attacks and the more recent sub-prime mortgage debacle. Given the mainstream perception that “market forces” are inherently good and self-policing, does this mean that there is a “method” to this skyrocketing crude oil price “madness”? Meaning who among us in their right mind would easily assume that the multinational petroleum conglomerates would be inclined to practice corporate social responsibility every time these conglomerates’ profit margins go through the roof? - Definitely not me.

One “perceptual construct” of the GOP and oil lobbyists -run policymakers of Washington DC and also of the phobophobic mammon peddlers running Wall Street frequently used to justify our skyrocketing crude oil prices is the this “Hoax of Peak Oil”. The “Hoax of Peak Oil” is this perceptual construct of scant proof citing crude oil production has reached a point when more than half of all our global reserves have been used up. Thus forming a conclusion with no proof whatsoever that the world is already on the wrong side of the “Bell Curve” when it comes to plentiful and cheap crude. Not only is this idea been used to swindle the average consumer from our hard-earned cash but also sacrificed countless young men and women around the world in the prime of their lives in the name of “crude oil supply security”.

Many economists around the globe have now questioned the Industrial World’s inability to transition away from “petroleum incumbency”. More than half of them, are now weary that the recent speculative bubble in crude oil – which has gone asymptotic since January 2008 – is about to go pop. Sadly, crude oil might have to reach the $500 per barrel price before this bubble will burst or the “Industrialized West” embraces alternative energy – whichever comes first. Probably because of unscrupulous speculators and futures’ traders paroxysm (i.e. sudden violent emotion or action) against the increasingly rave reports on Fortune and The Economist about renewable energy – like wind and solar – receiving big time venture capital investments since 2005.

History has told us since the Exxon Valdez disaster of 1989 and the August 1990 invasion of Kuwait by Iraqi strongman Saddam Hussein that we must move on from our unsustainable “Petroleum Incumbent” transportation and energy systems with ever increasing urgency. Our crude oil addiction is just simply unsustainable. Not just in terms of preserving a healthy environment, a dynamic and equitable economy, but also of the high cost in human lives as well that the global crude oil conglomerates seem to continue to overlook.