Two days ago in the Wall Street Journal an article was written titled “The Great Iraqi Oil Rush” under an add for the CEREWEEK 2011 energy conference.  The writer is Bhushan Bahree and is the HIS CERA Senior Director whose job is to focus on global oil markets, OPEC, and the Middle East. This was written as a heads up for what will be discussed at the energy conference in Houston, Texas this week.  I found it fascinating because the writer presents Iraq’s aggressive plan to produce and export their oil.  Why is this so interesting?  Because of what the book of Revelation says about Babylon in the time of tribulation.  I am specifically referring to Revelation chapter 18 where it speaks of Babylon, located in modern day Iraq, being a powerhouse in economic commerce.

I know we are all ticked off by AIG giving out bonuses to employees. True, AIG behaved in a reckless and ridiculous manner, clearly highlighting the vast gulf between the mindset of some American financial executives still living in the Land of Make-Believe and the rest of us living in the disorienting Land of Recession. But really. A retroactive tax?  As Senator Judd Gregg stated on Friday, it is wrong “to propose to use the taxing authority of the government in a manner that is arbitrary, punitive, and targeted on a single group of people.” I also like John Stewart’s description on Thursday’s Daily Show, “Congress got together and opened up a can of dumbass.” The people who rode along with the Bush Administration, helping to dismantle meaningful financial regulation, now want to create “smart bomb” tax policy. Good luck with that!

I topped off my CRV at the Exxon up the street, poured a cup of black coffee, and was handed change for my $20. I know I should have been happy, but as the coins clinked in my hand I had to wonder. Cheap gas lowers the cost to transport goods, saves people money getting to work and generally makes us happy. But we can’t forget that there are two sides to every coin. In many ways, cheap gas is bad for America. Cheap gas destabilizes key countries, discourages investment in alternative fuel development, and encourages Americans to live lives that are out of touch with environmental realities.  

In declining economic climates, populism often wins. Two of our world’s key nations are directly destabilized by dramatically lower gas prices. As you know, oil is exported to the US, where it is refined and made into gasoline. So the cost of oil is the source of the cost of gasoline. The fact that oil moved from $147 a barrel in July to the upper $30s in February is due to a complex combination of factors, but primarily it means oil consumption slowed faster than oil exporting countries could cut production. In Iran, 50% of the state budget is derived from oil exports. Unemployment in Iran, which had hovered around 15%, is now expected to go to 30%. Inflation is around 25%. The dramatic drop in oil has created an economic crisis that in turn has created a very tenuous political climate. Fundamentalist Muslims have been held at bay in Iran by national economic opportunity. If we think we have problems in the Middle East now, imagine what would happen if Iran collapsed.