Seriously: A barrel of oil is roughly worth the equivalent of a bucket of Kentucky Fried Chicken. Granted, at KFC, you get a few options to figure out exactly what you want to do with 30 bucks.
The 12-piece meal with three large sides and six biscuits is $29.99, or perhaps you just want the chicken, in which case you can get a 20-piece bucket for $28.99.
But if you have a large family to feed, you need a lot more than the cost of one barrel of oil, because the 20-piece meal with five large sides and 10 biscuits is coming in at $42.99.
Strange times are ahead for the global economy when it costs more to feed a family a bucket of chicken than it does for a barrel of oil.
Oil is Heading South
At the very moment I’m typing this, oil has rallied in the week to about $32 a barrel, which means you might just have enough to pay the tax on your bucket of chicken.
But don’t get too encouraged by the rally because experts are actually debating whether or not oil will eventually drop below $20 a barrel.
The reasons for the drop in the price of oil are many, and they have often been discussed in length already.
Supply is high due to the American shale oil boom, Saudi Arabia is keeping production high to squeeze American fracking companies, and now Iran is about to jump back into the market and give us even more oil.
Now, if you’re just an average consumer like myself, this certainly seems like a fantastic turn of events because we like cheap gas almost as much as we love our fried chicken.
One is finger-lickin’ good, and the other ensures we don’t have to walk anywhere and burn off our fried chicken calories.
But if you’re an investor, or perhaps a nation that generates revenue primarily through the sale of oil, you might be freaking out a little bit.
And when the markets and nations freak out, crazy stuff starts to happen to the average consumer.
The Conundrum of Cheap Oil
It really is a paradox that is hard to wrap our minds around when we consider that cheap oil can actually be bad for the world.
It’s not really that prices have dropped, but rather that they have dropped so sharply over such a short period of time.
Nations like Saudi Arabia that depend on oil for about 90% of their revenue could easily go bankrupt in as little as five years.
The Russian economy has been rocked by the drop in oil as well, and I’m willing to bet a desperate Vladimir Putin is slightly more dangerous for the world than we realize.
Iraq and Syria are both going to need a healthy amount of oil revenue to rebuild when the current conflict ends.
Iran needs oil revenue to pay for its secret nuclear weapons program because clandestine weapons of mass destruction are not cheap, you know.
America is actually on the verge of being energy independent with the recent uptick in fracking and shale oil.
But if the prices remain low, or if they should drop below the price of a 12-piece chicken bucket, a lot of those American oil producers are going to have to pack up shop.
In fact, that is actually what Saudi Arabia is banking on.
Would I be willing to pay $3 a gallon if that meant America was energy independent?
Seems like a good deal to me.
Paying a little extra at the gas pump is a cheap tax to keep Middle East countries from going bankrupt and then watching their disenfranchised populations turn to radical Islam.
There will likely come a day where oil plays a much lesser role in the world, and if we get there over time, we can deal with it.
But if oil prices drop below the cost of an 8-piece fried chicken bucket this year, there is going to be some serious turmoil in the world, and we might just be looking at $4 gas as the good ole days.
Strange days ahead indeed when a bucket of KFC seems like a safer investment than a barrel of oil.
