Oct 20, 2014
Oil and End-Time Prophecy
The world currently has a glut of oil. An economic slowdown in key industrial nations has reduced demand, and the new method of fracking drilling has increased supply. After staying above $95 per barrel for most of the past three years, the price is now around the $80 level.
The U.S. has had the most dramatic increase in production. Thanks to the ability to extract energy from shale rock, this year we’ve reclaimed the title as the world’s biggest oil producer, after overtaking Saudi Arabia and Russia. Our oil production has jumped from 5.0 million barrels per day in 2008 to 7.4 million last year and is expected to average 8.5 million this year and 9.3 million next year, according to the U.S. Energy Information Administration.
We’ve had an oversupply for several months but a series of world events has kept the price of oil from collapsing. The breaking point came when Saudi Arabia decided to cut prices instead of cutting production, setting off a scramble on world markets.
The Saudis clearly don’t want to repeat their actions of the 1980s, where they slashed production from more than 10 million barrels per day in 1980 to less than 2.5 million bpd to try to stabilize the price. Because of cheating from fellow OPEC members, the price kept falling like a rock; with crude oil going from $35 to below $10 per barrel. The cut backs left Saudi Arabia with huge deficits that took years to overcome.
Some political analysts have wondered if this price decline has been engineered by the U.S. government to put pressure on Russia over the crisis in Ukraine. Moscow has already based its budget for 2015 on the assumption that oil sales would run at $100 a barrel. Russian President Vladimir Putin is starting to feel the pressure and is slamming the West for an economic policy that he sees as an attempt to blackmail his nation:
“Russia’s partners should remember the risks involved in disputes between nuclear powers. We hope that our partners will realize the futility of attempts to blackmail Russia and remember what consequences discord between major nuclear powers could bring for strategic stability,” Putin told Serbia’s Politika newspaper on the eve of his visit to the Balkan nation.
Two other foes of America are also at risk from low oil prices. Venezuela is in an outright panic calling for emergency OPEC action to stem the slide in oil prices. Iran is heavily reliant on oil sales for income. It is also on shaky economic ground. Both of these nations have already been weakened by Western sanctions. Prolonged low oil prices would implode their economies.
Another victim of low oil prices may be the entire U.S. fracking industry. This type of drilling would not be possible if not for the cheap money policy by the Federal Reserve. The industry has debts that total nearly half a trillion dollars. If rates were normalized, it would cost at least $110 per barrel to produce oil from fracking methods.
The Saudis know they can win a price war with fracking companies. To maintain production of one million barrels of oil a day from Saudi Arabia one needs to drill around 50 new wells a year. Extracting the same amount from the Bakken shale deposit would require 2,500 new wells. A typical fracked well that came online in 2009 had output of about 1,200 barrels of oil per day. Just four years later, however, output from the same well has fallen to just 100 barrels of oil per day.
Even if fracking firms survive a prolonged decline in the price of oil, they may not be around much longer. In the next few years we are likely to reach the peak production from fracking fields. Once the boom turns to a bust, America will have to turn back to the Persian Gulf for its energy needs.
It’s not going to be easy for us return to the Middle East oil trough. China has largely taken our place. In 1980, Chinese oil consumption was at 2 million barrels per day (bpd). Today, it consumes over 10 million bpd. By 2020, its daily usage is expected to rise to the 18 million bpd.
In 1974, John Walvoord wrote the book, Armageddon, Oil and the Middle East Crisis. The book made the simple observation that the world’s dependence on oil would be a driving force in Bible prophecy. His prediction has remained true because it is based on Scripture.
The Antichrist’s primary role in the final peace agreement may have a more practical purpose. Instead of seeking after the Noble Peace Prize as some prophecy writers have predicted, the real reason for his involvement may be to simply create a stable environment for the flow of oil.