Monday, January 5, 2015

Oil price decline breaches $50 per barrel...

Today, the spiraling decline in the price of oil breached $50 per barrel.  The last time this happened was in 2009.
The obvious Losers are:
1. Oil-dependent Russia
2. US alternative energy companies
3. Government projects dependent on oil revenues (such as the Malampaya Fund-dependent AFP Modernization Program)
The obvious Winners are:
1. The US driving public
2. Oil-hungry China and India
3. The Ukraine

This development will further wreak havoc on Russia's economy.  And will force Russia deeper into the welcoming hug of China for some kind of financial bail-out.
This will not come cheap.  China will use this opportunity to gain overt access to advanced Russian military technology.  Technology which China herself will then use to intimidate her neighbors to accede to her territorial ambitions.
On the other hand, this will give the Ukraine (and other former Warsaw Pact territories currently being bullied by Russia, such as Georgia) breathing room to regain its lost territories.  At $40 per barrel, Putin's delusions of military grandeur will grind to a screeching halt.
Unfortunately, this development will not be very good for the energy-dependent military modernization programs of the key stakeholders in the West Philippine Sea disputes instigated by Beijing.  The military budgets of Indonesia, Vietnam, Malaysia, Brunei, and the Philippines are all dependent on energy exports.
A fact that will be too obvious for Beijing to miss...  

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