All the data that we have right now indicate a big jump of the oil price. First of all, we saw recently Middle east protests had an impact oil prices. Those protests have spread in many countries including Libya and Bahrein. Barhein is close to Saudi Arabia and every event in one of that country will have consequences on the other. Since Saudia Arabia is one of the largest oil exporter in the world, a rise of prices seem inevitable.
But another phenomenon will make the price soar.
There is a shortage of food in the world right now. It means that the price of the food is also higher. Big oil exporters are not big food producers and, consequently, need to import most of their food. But with the prices rising they will need more money. To obtain this money they will probably reduce the supply of oil. If they manage do that they will be able to sell oil at a higher price.
It’s very likely they will do that because food shortage is historically one of the leading causes of revolution. With the recent events in the Middle East, Saudi Arabia officials cannot take the risk of having not enough money to supply their people with food.
And with big Middle East countries buying more, the prices of food will go also higher. However, not all countries can sell natural resources to buy food. So we may see protests in a lot of countries, not only in the Middle East, but also in Africa and even East Asia.
Make sure to be ready for the events to come. Revolutions in the Middle East and Africa, high oil and food prices will have important consequences on every country. It’s very likely that we’re going to see a worldwide crisis and political changes in almost every continent in the following months.
The question is will it spread to America? First of all, 40 to 50 millions Americans are receiving food stamps right now because of high unemployment rates. If the price of food rise in the next months more and more and people will need food stamps. And, as we said, food shortage is one of the leading causes of revolution. With the Tea Party movement, we saw a lot of angry people going in the streets to protest. And that’s was just because of government’s overspending. Imagine how many people could join this kind of protests if they don’t have enough to eat.
Maybe the current administration will be able to handle that by giving away more food stamps. However, they will probably not be able to provide all American citizens with oil. And, with not enough oil, people cannot go to work. It will obviously be a major cause of public discontent.
Let’s hope all of this will not happen. Let’s hope that the American economy will recover and that the situation in the Middle East will stabilize. However, the more I talk to managers the less I believe the American government will be able to handle the situation.