The implosion of global oil prices that dominated the last quarter of 2014 will likely set the stage for the major economic news of 2015; the economic destruction wrought by the collapse of petro-economies. With the price per barrel of oil now south of fifty dollars, the stage is set for global economic volatility.

The vast level of price destruction being witnessed globally is only good news in the very short term; lower consumer prices at the pump, and a reduction of fuel expenses for major importers and industrial users of petroleum-based fuels, such as airlines. These short-term benefits will likely be overwhelmed by the fiscal consequences enabled by the implosion of oil prices  that will be faced by economies largely dependent  on oil export income to maintain their balance sheets.

Iran, Nigeria, Venezuela and Russia are among these economies most vulnerable to the collapse in oil prices. Currently, Nicolas Maduro, President of Venezuela, is hopping the globe in a desperate attempt to save his regime from defaulting on its sovereign debt. Countries facing fiscal disaster owing to the collapse of their major source of export income may resort to desperate measures, which may in turn create collateral ripples that afflict unforeseen damage on the global economy.

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Since mid-June the price per barrel of petroleum has collapsed by a staggering 37 percent. This almost perfectly  mirrors–in reverse- -the steep rise in oil prices  in mid-2008, which was followed by an equally sharp contraction when the Great Recession–the onset of the global economic and financial crisis–struck with full fury.

Only a few years ago, the talk in global investment circles was about the phenomenon of Peak Oil.  However, several factors have converged to precipitate the collapse of oil prices. Not only has the continued slump in the Eurozone  softened global demand for petroleum exports; the production of shale-derived oil in the United States, enabled by cost-effective technological breakthroughs in extraction, has greatly increased the global supply of oil, while dampening demand in the U.S. for oil imports. Furthermore, China’s growing appetite for imported oil has been at least partially retarded by lower rates of economic growth. In addition, OPEC has failed to cut global production, thus maintaining high global output of oil.

Oil remains a volatile commodity. A new crisis in the Middle East, particularly with Iran, could easily spike oil prices. However, if the economic forces that have propelled the downward  pressure on petroleum prices prove stable, the result could very well be fiscal calamity for several oil-dependent economies, particularly those of Venezuela and Iran, and to a slightly lesser degree Russia. Left uncertain is the long-term impact of shale oil extraction in the United States, which requires prices above the cost of extraction, currently in the mid-forty dollars per barrel range, to remain economically viable. With the current per barrel price of oil below 70 dollars, it is not inconceivable that further declines may place the booming shale oil industry in the U.S. in a serious quandary.

The current collapse of oil prices, combined with other negative economic trends, opens up long-term implications that will further upset the already fragile state of the global economy. The short-term befits of lower prices at the gas pump will be likely offset by the worldwide ramifications of shrinking fiscal resources for major oil-exporting emerging economies, which may place financial institutions and investment firms at risk that are highly exposed to debt by sovereigns that are highly reliant on oil exports.

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

CLICK ON IMAGE TO VIEW VIDEO Hillary Clinton Nude

The so-called “Bolivarian Revolution,” the term used by the left-wing regime in Caracas to describe the social and economic experiment they have imposed on Venezuela for the last 15 years, has made the late Venezuelan leader, Hugo Chavez, and his hand-picked successor, President Nicolas Maduro, the darlings of left-leaning pundits. But the charade that is the Venezuelan economy, built on the world’s 5th largest proven oil reserves and official economic statistics that have no connection with reality, appears to be on the verge of collapse. Rocketing inflation, a currency rapidly losing its intrinsic value, and an economy that cannot even produce  or purchase enough toilet paper for its citizens, combined with one of the worst murder rates in the world, have brought the masses, in the tens of thousands, into the streets.

The so-called progressive regime in Venezuela has reacted to the public protests in a manner not dissimilar to other repressive regimes; brutal suppression by the authorities , including the use of live ammunition, and arresting a key opposition figure  and other “troublemakers.”

An excellent analysis of the economic and political chaos that is occurring in Venezuela appeared recently in the Toronto Globe and  Mail,  written by Stephanie Nolen  and entitled, “With oil economy running on fumes, Venezuela ‘on the edge of the apocalypse.’ ” The link to the article is here; http://www.theglobeandmail.com/news/world/venezuelas-economy-on-the-edge-of-the-apocalypse/article16845406/

If Hillary Clinton runs for President of the United States  in 2016, see the video about the book that warned back in 2008 what a second Clinton presidency would mean for the USA:

Hillary Clinton Nude

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