John Fund notes with interest in a National Review Online column that recent improvements in fuel prices mean bad news for American foes.
[T]he recent 40 percent collapse in oil prices down to the $60-a-barrel range is leading to a lot of hand-wringing among oil-producing nations that are also America’s adversaries. The distress is afflicting a group of thugs who well deserve it.
It’s been amusing to see anti-U.S. demagogues rail at low oil prices. Venezuelan president Nicolás Maduro, the Mini-Me of the late dictator Hugo Chávez, took to state-run TV last week to blame U.S. fracking technology for the collapse in prices. “We’ve got to get oil back to the price where it needs to be,” he whined. “The oil they’re taking from [shale deposits] and the gas. They’ve flooded the international market to batter Iran and to hurt us, Venezuela.”
Iran is blaming both the U.S. and its neighbors in the Mideast. Iranian government spokesman Mohammad Bagher Nobakht told Muslim clerics in October that “some so-called Islamic countries in the region are serving the interests of America and [other] arrogant powers in trying to squeeze the Islamic Republic.” He later told reporters that the West has “forced our oil production from 4 million barrels per day to 1 million barrels per day.”
Then there is Russia. Vladimir Putin is in denial over the falling price of oil. “I am sure the market will come into balance again in the first quarter or toward the middle of next year,” he said recently. He appears not to have a Plan B if oil prices continue to decline. The three-year Russian budget he just signed into law is based on an oil price of $100 a barrel. Dissenting voices are squelched. When Alexei Ulyukayev, Russia’s economic minister, predicted that Russian real wages would decline by 3.8 percent in 2015, he was quickly contradicted by Putin economic aide Andrei Belousov, who dismissed the pessimistic forecasts as “a bunch of numbers” and “a technical mistake.”
But numbers do have consequences, and if oil prices continue to fall, Putin will have to ponder his response. Mikhail Gorbachev and Boris Yeltsin wielded enormous power in the Kremlin, but both were humbled and limited by economic downturns that caused popular unrest. Despite his strong will, Putin may have to reconsider his foreign adventurism and his refusal to go along with reform-minded advisers who are urging him to deregulate the Russian economy and limit corruption.
