Economic House of Cards
By Hal Lindsey
Apple Inc. made an $18.4 billion profit in just the fourth quarter of 2015. It was the most profitable quarter by any corporation in U.S. history, beating Apple’s own record from a year ago. Yet, in the last six months, shares in the company have fallen almost 20%.
The Chinese government claims its economy is still growing at almost 7% per year. But I’m not sure anyone believes them. As of this writing, Chinese markets are down 24% this year, and we’re still in January.
CNBC reports, “Investors trying to cope with one of the worst starts to a year on record are beginning to weigh up the possibility of global recession, as oil prices hit 12-year lows and Chinese growth fears leave markets with little room for optimism.”
The central banks of almost every country have interest rates at or near zero. They’re printing lots of money. They’re doing all the things they know to do to fight off recession. But, so far, nothing’s working.
In the 1970s, most Americans saw OPEC as public enemy number one. Today, it’s easy to feel sorry for them. Bloomberg Business reports that in Norway, a single salmon costs more than a barrel of oil.
But maybe we shouldn’t feel too bad. Oil’s current prices are probably setting us up for an extreme rise in the future. OilPrice.com predicts, “The biggest result from the collapse in oil prices could be a future price spike.”
Despite talk of alternative energy sources, the world will need oil for a long time to come. But prices are too low right now to continue investing in new fields and infrastructure. As the oil industry retrenches, projects that were already planned or in process, are being canceled left and right. That will mean rising demand and diminishing supply in the future.
Historian and oil expert, Daniel Yergin, recently said, “There has been a $1.8 trillion reduction in spending planned for 2015 to 2020 compared to what was expected in 2014.”
According to OPEC’s secretary-general, Abdullah al-Badri, by 2040, the world will need another 17 million barrels of oil a day. Yet many of today’s oil fields are rapidly depleting and need to be replaced. It’s not that the earth is about to be drained dry of oil. Geologists in the last decade have found an astounding amount of untapped oil. But it takes time and money to build the infrastructure needed to get the oil out of the ground, into a useable form, and into the hands of people and industries.
That’s why canceling or postponing big oil projects now, sets the world up for a massive spike in oil prices over the next few years.
An oil glut supposedly caused the drop in prices. But there is no glut. According to The Telegraph, “The paradox of the current slump is that global spare capacity is at wafer-thin levels of 2%… leaving the market acutely vulnerable to any future supply-shock.”
Claudio Descalzi, head of Italy’s oil group Eni, put the world’s 2% spare capacity into perspective. “In the 1980s,” he said, “it was around 30%. 10 years ago it was 8%.”
Don’t read this as investment advice. It is not. That’s not my point here at all. I can only guess what will happen to oil prices or anything else in the market. I am a student of prophecy, not a prophet.
But as a student of the Bible, I can say this. The world provides no truly safe havens for money. We should be diligent stewards of the wealth God places in our hands. We should invest as wisely as we know how. And we should ask for God’s wisdom.
But as you invest, don’t look to a particular market, commodity, or company for your security. This world does not provide security. If you bought Apple stock in 1980, my heartiest congratulations. If you bought it six months ago, my sincerest condolences.
That’s why we should all heed the financial advice of Jesus. “Do not lay up for yourselves treasures upon earth, where moth and rust destroy, and where thieves break in and steal. But lay up for yourselves treasures in heaven, where neither moth nor rust destroys, and where thieves do not break in or steal; for where your treasure is, there will your heart be also.” (Matthew 6:19-21 NASB)