Why Low Gas Prices Are Great for Americans But VERY Bad for Russia
By spring there may be a new, defining topic for the 2016 Presidential election. Nope, it doesn’t have much to do with Hillary’s FBI investigation and possible Justice Department indictment.
It doesn’t have anything to do with a Sanders upset in Iowa, a late entry by Biden or Bloomberg.
And it has little to do with terrorism.
It doesn’t even have anything to do with the east coast’s snow storm. (Yours truly recently drove to DC from San Diego – there’s a huge chunk of America that doesn’t really care much about the snow storm; it’s viewed in a lot of places as a local story imposed on national coverage because the media lives in DC and New York).
Every American sees it each time he or she pumps gas. The per gallon price is really, really cheap isn’t it. For many, gas prices like these haven’t been seen since the late 1980s or early 1990s. And that’s a good thing.
But, there are two sides to everything. Take steak for example. A well prepared steak for many is a great thing. Unless you’re a cow. Then you’re more likely to wear a sandwich board with “eat mor chikin” scrawled across it. What’s good for one isn’t always good for all.
Russia is taking a beating over low oil prices. Moscow’s economy depends on $50 per barrel oil. They are coming up about $20 short based on current oil pricing at around $30 per barrel. There’s a really strong chance Russia might go belly-up much in the same way the Soviet Union did when the Cold War ended.
Russia’s GDP, it’s recently been reported, shrank by 3.7%. Inflation is upwards of 12%. Retail sales are down 15% and investments down 8.7%. The ruble is down in records numbers against benchmark currencies.
If the Russian economy does in fact collapse, the implications are far reaching. Among other things:
— How would it impact Russian involvement in Syria? Is Russia’s presence sustainable if the Russian economy is broke? Is Putin likely to act in an even more brash fashion than he has thus far to try and solidify his own domestic base?
— What happens to the Assad regime? Moscow has supported Syria for decades – going back to the Soviet-era. If Assad loses Russian support, will he be deposed and if so by which of the more than one hundred insurgent groups active in Syria today? Will ISIS gain control of Damascus?
— How about Iran? The mullahs are Russian clients. Who will Rouhani turn to if Putin can’t deliver quid pro quo?
— What comes of the quagmire that is the Crimea?
— How about all those landlocked countries, many who’s economies depend on pipelines that cross Russian territory on their way to seaports? In a lot of ways their financial well-being is married to that of their larger Russian neighbor.
The headlines of today are likely to be very different as 2016 moves away from ambiguity and closer to a defined field of Presidential candidates.