When core commodity prices such as oil are going down, logically, anything else that depends and adjusts to these commodities would become cheaper too. Let’s say oil prices are going down big time, and so the gasoline prices should be plummeting too. Let’s say oil prices are going down big time, and food and transportation costs should also plummet too. With lower oil prices, companies that produce products should see cost reliefs (e.g., transportation, commodity prices, etc…). Basically, any price of core commodities plummets should bring the prices of the related products and services down.
As we speak, world politics and agenda have pushed the prices of oil way down. Not too long ago, I remember oil prices were near the $100 price range. Nowadays we are seeing oil prices go under $40. I don’t think we are seeing the natural cycle of supply and demand at work for oil here, because world politics is dictating the terms. Sure, many countries are pumping more oil out of the oil wells even though the oil prices are being suppressed at a super low level, but these countries are doing so to manipulate the world’s oil market in an artificial supply and demand way. Normally, the world market should be the factor that influences the supply and demand curves.
Since oil prices are plummeting way low in an unnatural manner, any small positive news could really affect the oil prices. Oil prices are also being stressed out by the advances in green energy technologies. As the present keeps on pushing for a greener future, the oil will have to compete with various green energies for market share. If politics stay away and the world market gets to decide, prices for oil and other energies should balance out according to the supply and demand curves.
It’s worrisome to see that countries are not on the best of terms with each other nowadays. The Middle East is still experiencing great violence. Europe’s economic might is in further decline. Elsewhere is not doing too well as the whole world is experiencing a recession or depression, depending on who you would raise the topic with. Cheaper oil could also mean oil is more accessible for stockpiling. A great oil stockpile means instigating war or preparing for one is rather convenient.
If war breaks out now, the prices of most services and commodities will shoot up. This too isn’t natural since war conditions would push the natural market forces aside. Both politics and war would be the major factors in manipulating market prices, and I surmise that people who can easily wield these factors will be able to make a lot of money. This is why we keep hearing someone would say something along this line, war is money. Well, politics is also money! I think war and politics are money-making machines.