You probably noticed it when driving to work and passing gas pumps.  There’s a sudden drop in prices per gallon across southern Idaho.  Is this the beginning of a trend?  Probably not.  It’s potentially related to fears of a meltdown in the Chinese economy.  Several large government-controlled real estate firms are on the verge of insolvency.  The Chinese economy, the second-largest and fastest-growing in the world, could be taking a face plant.

There are comparisons to our economic meltdown and the “Great Recession” that followed.  In the summer of 2008, gas prices across much of America were over four dollars a gallon.  By Christmas, I remember buying unleaded regular for a dollar forty a gallon.  That's because the oil market tanked alongside the economy.

We Could go From One Extreme to Another

Here’s why the Chinese situation could have a short-term impact.  If the Chinese government is looking to distract its people, the invasion of Taiwan will be moved up ahead of schedule (it’s an opinion).  If that happens, the oil market will contract faster than Bill Shatner’s sphincter as he was launched into space.

Needed Oil Investment is Lacking

Even if China postpones an invasion, there are predictions of much higher costs per barrel along the way.  Halliburton warns there hasn’t been needed investment in new wells as the world emerges from the pandemic.  OilPrice.com is calling it global scarcity.

I still have an old bicycle for emergencies.  I’ll admit I’m out of shape and riding it to work in winter and before sunrise has little appeal.  My choice is a bike or some other household expense will need to go.  If we all make those choices then the entire world economy will be headed for a slowdown.

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