Major reason behind the drop in oil price

One of the real reasons why the price of crude oil is falling like lead is that the Chinese economy, the second largest in the world, is getting sluggish in growth. Second, traditional buyers of crude, like the United States of America, have not only stopped buying oil; they are selling it. Even cash-strapped Russia is selling crude for quick cash (it has gas pipelines all over Europe).

Another reason is that the rogue state, ISIS, is selling oil from the Mosul region of Iraq at a giveaway price. Also, the biggest member of Organisation of Petroleum Exporting Countries cartel, Saudi Arabia, which has one quarter of the world’s confirmed oil reserves, is prepared to sell its oil at any price for fear of losing its share of the market.

In other words, we are witnessing an oil glut that is fuelling an undeclared or ‘cold’ price war. Every oil producing country is stealthily exceeding its quota. As you know, a law of economics says that where supply exceeds demand, prices fall.

America is looking to acquire a substantial share of the market and pick up profit for its shale oil. Coy Saudi Arabia certainly won’t concede any portion of its market share to any nation, within or without OPEC, no matter the plea from or assurances of King Salman al Saud to Nigeria’s President Muhammadu Buhari. Every barrel of Saudi crude oil is a pawn in this ongoing economic real politik stare down, which puts Nigeria’s hope of raising its petro-dollar revenue to the east of the rock and the west of a hard place.

This is the shakeup stage that will separate the men from the boys. The US will continue to push its shale oil for imperialistic purposes, although the product is coming to the market at a very high cost. America’s shale oil industry is still a very high risk enterprise and companies in that business are financed largely by high interest rate debentures.

The yield or return on investment isn’t fast enough. Therefore, many of the shale oil prospecting companies are behind in servicing their debts. This failure, Bloomberg suggests, will pile up unpaid interest charges and snowball the current $25 billion debt into a hefty $260 billion by 2022.

One more thing, America, the world’s richest economy with the highest inventory of military arsenal, seeks to further widen the gap between itself and the rest of the world. That country needs a big financial war chest to acquire even a higher stockpile of military equipment in order to more effectively police the world.

It desperately wants to decapitate and effectively restrain regional insurgencies like ISIS, Boko Haram, Ansar Biden and al Shabab, as well as check terrorist attacks by terror groups like al Qaeda within North American and Western European cities.

The struggle to gain or retain market share is based on the premise that the price of crude oil comes with a predictable cycle and your market share will determine how much bundle you can run away with when oil price swings back up. OPEC President and Qatar’s Minister of Energy and Industry, Muhammed Al Sada, recently speculated to CNN that crude oil prices may rise to $50 per barrel by February 2017. The vulture is a patient bird.

No matter the hype about alternative energy – solar, wind, hydrogen powered cars, electric trains, or whatever – no one is going to wean the stock of industrial plants and machinery, automobiles, ships, aircraft, military hardware and other equipment from petroleum products, such as petrol, diesel, black oil, kerosene, lubricants, grease, et cetera, very soon. It’s going to cost a lot of money and time to replace all this machinery.

It will also take a long time to replace petroleum by-products like polyester fabric, sundry plastic products, automobile parts, domestic appliances, even fertiliser. For now, and for a long time to come, crude oil will be the sprocket wheel that turns the world economy. All current alternative energy sources simply do not match its scale. Any premature attempt to switch off petr