Why the Hike in Gas Prices?

Why the Hike in Gas Prices?


Crude oil prices are at record highs. What’s behind the hike, how high will it go, and what are the larger repercussions?

On June 27, crude oil prices on the New York Mercantile Exchange closed above $60 a barrel for the first time ever. American consumers are worried that gas prices will continue to climb, and many businesses are likewise concerned. After all, the price of oil has shot up about 60 percent in the past year. Where will it go from here?

The Trumpet’s article “Black Gold” describes the supply-and-demand dynamics of global oil consumption and, more importantly, what to expect in the near future, and why.

As usual, the experts disagree. Some predict prices will drop. They believe that the sizzling Chinese economy is due to cool, leading to a reduced demand for energy. They also claim that more oil could be extracted from various sites in Iraq, Africa and elsewhere, thus increasing the supply. Furthermore, the massive oil-rich tar sands of Canada have not been developed because it’s been too expensive to extract the oil from the sand. With record high prices, that alternative, they say, is no longer cost-prohibitive.

On the other side, experts don’t see a practical solution in the offing. The world consumes roughly 83 million barrels of oil every day, compared to 77 million barrels consumed in 2001—an increase of 6 million barrels a day in just four years. Spare production capacity, which averaged about 5 million barrels a day over the past 10 years, has plummeted to a mere 1.5 million barrels a day. The gap between supply and demand is closing rapidly—too fast for potential development to stem the rise of prices.

Even if the oil supply could keep up with growing demand, bottlenecks in the supply chain would have to be overcome. Refining capacity (especially for heavy crude) is largely maxed out, and supertanker transports are limited.

Moreover, there’s an acute shortage of the engineers and professionals needed to develop additional oil projects. For example, when the American Petroleum Institute surveyed 17 percent of the oil industry, those companies alone said they needed more than 5,000 engineers in the next five years. In 2003, only about 1,500 students were enrolled in U.S. petroleum engineering programs.

Besides the lack of professional talent, aging equipment needing to be replaced also contributes to rising prices. And not just in the United States. The Saudi oil minister recently disclosed that “energy-project costs had risen as much as 60 percent due to a shortage of engineering talent, equipment and raw materials” (post-gazette.com,June 28). In the U.S., the cost of drilling an onshore oil well has skyrocketed from $800,000 to $1,500,000 in just 15 months—costs that are passed on to you at the pump.

Beyond these concerns, there is reason to suspect that the world’s top oil producer, Saudi Arabia, does not have the reserves it claims to. “Almost 90 percent of Saudi production comes from six giant fields, all of them discovered before 1967. … The six major fields, having all produced at or near capacity for almost 40 years, are showing signs of age. All require extensive water injection to maintain their current flow” (Wall Street Journal, June 28).

Finally, another factor that affects the price of oil is overlooked by some analysts today. Due to the ever-tightening gap between supply and demand, there’s an added premium that rises and falls according to the perceived threat of terrorist activities, the intensity of supply disruptions, or other kinds of instability arising in oil-exporting nations. Our two articles “Black Gold” and “The Vital Sea Gates examine the geopolitical ramifications tied to the world’s number-one commodity in light of Bible prophecy.

Read these articles and you will understand why, when oil was fluctuating between $40 and $45 a barrel, we were confident that $70 a barrel was “a reasonable expectation of what to expect in the foreseeable future” (“Black Gold,” Sept/Oct 2004). We still are. Gas prices will continue to rise over the long haul, and that will play a role, unfortunately, in the decline of the U.S. economy.

Turkey Employs Islamists

From the July 2005 Trumpet Print Edition

“Turkey has been employing thousands of Islamic fundamentalists in violation of its secular constitution. An opposition parliamentary faction … said the Islamic fundamentalists have entered all areas of government …. ‘[T]housands of anti-secularists have been employed by the state in accordance with the government’s wishes,’ Ali Topuz, deputy chief of the opposition Republican People’s Party, said.”

Middle East Newsline, April 18

Dangerous Liaisons

In April, Russia and Germany took their partnership to a new level. In May, the EU and Russia boosted their cooperation as well. What does this warming relationship mean for the world?
From the July 2005 Trumpet Print Edition

How far off is the next world war?

Well, if history is prophecy, as Winston Churchill said, then what is happening between Russia and Germany these days should cause grave concern!

As the Ambassador College Bible Correspondence Course stated, “In six separate instances within the last 200 years in which Germany has turned on the West, she has first made a pact with Russia to make herself safe from the East” (Lesson 3; emphasis mine throughout).

The strategic relationship now building between Germany and Russia should blast warning signals throughout the world. History’s track record in this particular cycle of events is unmistakable: Germany and Russia form an alliance that serves both their needs; Germany uses it as leverage against the West; and eventually the alliance ends with Germany and Russia facing each other in a bloody conflict—witness World War ii!

Russia’s relationship with Germany and the European Union is a clear signal that similar events are about to occur again. Here is why.

Repetitive Cycle of History

As the May 1962 Plain Truth stated, “The concept that Germany must ally with the East against the West goes back as early as Frederick the Great”—about 240 years.

In 1872, just after he united the North German Confederation with the southern German states into a single German Reich under Prussian leadership, Germany’s Otto von Bismarck formed the Three Emperors’ League with Russia and Austria. This relieved the Reich’s fear that Russia might join with rival France in a war pitting the newly formed German Reich against foes both to the west and east. But because of Russia’s and Austria’s differing strategies concerning the Balkan Peninsula, the league broke up six years later.

Bismarck resurrected the alliance for a second time in 1881—only for it to break up in 1887 due to continuing rivalries between Russia and Austria. That year, Bismarck rushed another agreement—this time separately with Russia—to prevent France snatching Russia away as an ally. This agreement between Germany and Russia, known as the Reinsurance Treaty, continued until the next kaiser, Wilhelm ii, sacked Bismarck and rejected his policy of keeping “the lines open to St. Petersburg” (then capital of the Russian empire). So in 1894, Russia did what Bismarck had always feared: It allied with France. Twenty years later came the two-front war Bismarck had tried to avoid, and Germany entangled itself in a conflict on both its eastern and western flanks. That was World War i.

This is where the modern history of Germany’s and Russia’s relationship begins. In 1922, four years after the Great War ended, Germany and Russia stunned the world with a pact signed in Rapallo, Italy, which opened complete diplomatic relations between them. Europe’s power balance had shifted overnight. Through the pact, the German Army could test weapons in Russia that were forbidden by the Treaty of Versailles.

Even when Hitler became chancellor in 1933 and a wave of anti-Russianism gripped Germany, the Nazis made a move that seemed contrary to their anti-Soviet policy. Hitler’s foreign minister, Joachim von Ribbentrop, secretly flew to Moscow in August 1939 to sign a non-aggression pact with Russia’s Stalin. With Russia neutralized, Hitler’s eastern flank was secure. One week later, Hitler invaded Poland, and Russia took the Baltic states (Estonia, Latvia and Lithuania). Two years later, Germany violated the pact and attacked Russia.

The history is quite clear. Whenever it has wanted to expand its empire,

Germany has always first removed the Russian threat through diplomacy. Whether it was protecting itself from a Franco-Russian alliance in the late 19th century or trying to extend Nazism across Europe without fear of a Russian attack, Germany has learned that “friendship” with Russia is in its best strategic interest.

New Level of Cooperation

At this year’s April 10-11 technology exhibition in Hannover, Germany, Russian President Vladimir Putin met with German Chancellor Gerhard Schröder in a summit that brought the two countries’ relationship to new heights.

At this summit, the two leaders signed multiple agreements in areas such as energy, transportation, education, research and innovation. Putin and Schröder said they would “establish strategic partnerships in every sphere” (Stratfor, April 11).

The bond between the two countries—the two leaders especially—has grown over the past few years. Now, with what transpired in Hannover, the two countries have upgraded the partnership by increasing “their geopolitical ties and … shifting from a low-technology economic cooperation to high-technology cooperation as the base for this strategic partnership” (ibid., April 12).

The difference between low-tech and high-tech cooperation, Stratfor explained, is “the difference between having and not having a truly substantial strategic alliance. Low-tech cooperation simply involves transferring goods from one place to another, while high-tech cooperation involves sharing technology and goods in a way that strengthens both economies.”

How much high-tech cooperation are Germany and Russia enjoying? Last year, Germany invested $1.7 billion in its big eastern neighbor. At the Hannover exhibition, it signed up for $6 billion. A huge portion of that figure will fund a project that will pipe natural gas through the Baltic Sea by the end of the decade. This venture will pump resources directly into Western Europe. It also means Russia will be able to bypass a pipeline that goes through Ukraine and Belarus—giving Russia’s state-owned gas company (Gazprom) more bargaining power over the two westward-looking former Soviet nations.

According to Stratfor, this, together with other business agreements, is “evidence of a substantial, real alliance taking shape” (ibid.).

That is, in fact, what Schröder said in a press conference about the summit: “We have now a very deep cooperation. … It is known that both countries are very close when it comes to energy. But we are developing a strategic partnership …” (International Herald Tribune, April 12).

Countering the U.S.

This strategic partnership between Russia and Germany will further intensify both powers’ global weight. It will help propel Europe to superpower status. Both Putin and Schröder know that their firm alliance helps to counter U.S. dominance in world politics.

Back in May 1962, the Plain Truth said, “Once a German-dominated Europe is fully established, Germany will be ready to negotiate and bargain with Russia—and behind the backs of the Western Allies if necessary. … What is now developing is a neutral European power dominated by Germany and allied with Russia! British and American armies will be forced to leave Germany and Europe.”

This is, indeed, happening. Following on the heels of four previous rounds of U.S. military base closures in Germany, U.S. Defense Secretary Donald Rumsfeld made an announcement on May 13 recommending the return of a further 70,000 U.S. troops from Germany. According to Defense Department officials, about half of America’s military facilities in Europe are to be vacated.

It’s only a matter of time before the divide between the United States and Europe develops into a total pullout of U.S. forces from the Continent, thus marking a new chapter in Euro-Russian relations.

Economic Benefit

When Germany benefits from its relations with Russia, so will Europe as a whole—and Russia. Both the European and Russian economies are in need of help.

Russian trade with Germany is roughly the same as that with America. Energy-wise, the strong economic relationship between Russia and the EU is quite evident: Russia is the largest single energy partner of the European Union. Germany receives 30 percent of its oil and over 40 percent of its natural gas from Russia. Russia is the EU’s largest supplier of uranium.

An EU Commission document published back in 2003 stated, “For the European Union, it is important to maintain and enhance Russia’s role as a supplier of gas and oil and to strengthen Russia as a secure and reliable supplier through technology transfers and investments to upgrade Russia’s energy infrastructure” (communication from the Commission to the Council and the European Parliament, May 13, 2003). So, though acting out of self-interest, the EU is sending great benefits Russia’s way.

As Moscow-based analyst Peter Lavelle said, “[T]here is no doubt about [Putin’s] plans for Russia’s economic and trade future. Russia’s economic future lies with Europe and China” (Asia Times, April 5, 2003).

Germany alone is responsible for more foreign direct investment in Russia than any other country. Combined with the rest of Europe, the facts are clear. “Of the $19 billion of foreign direct investment in Russia since 1996, American companies have accounted for just $4 billion, as opposed to the European Union’s $7 billion,” Lavelle wrote. “Russia’s bread-and-butter politics are solidly focused on economic performance and not foreign-policy concerns. This is Putin’s political prime directive.” In other words, Russia goes where the money is: Europe.

Might this arrangement have contributed to Moscow’s willingness to side with Berlin and Paris when the U.S. was preparing for its Iraq campaign? Is it any wonder, as the EU’s power increases and the U.S.’s declines, that Moscow would strategically align itself more with Europe?


From the time World War ii ended, the Plain Truth—predecessor to the Trumpet, founded by Herbert W. Armstrong—watched the relationship between West Germany (now united Germany and at the head of a united Europe) and the Soviet Union (now Russia).

Throughout its 50-year-plus history, under Mr. Armstrong’s leadership, the Plain Truth warned its readers of another non-aggression treaty between Russia and Germany that would vividly spell out Germany’s and Europe’s intention to dominate the rest of the Western world once again.

Take this excerpt from May 1962: “When a Russo-German deal is made, you can be sure that the doom of the United States and Great Britain is on the horizon. A German-Soviet agreement—a second Rapallo—would be the greatest disaster which could befall the West.”

The same article predicted that a treaty between then-West Germany and Russia would lead to the eventual reunification of Germany (as East Germany was then controlled by the Soviets). Notice this statement: “Trade agreements and a non-aggression pact will be signed with Russia. Germany will again be united and her ‘lost lands’ restored. The result will shock the Western world!”

Then, in August 1970, the Moscow Treaty—a treaty of non-aggression—was signed between the Soviets and West Germans. The Plain Truth heralded this as “the biggest single political event in Europe since the end of World War ii” (August-September 1970). Germany was positioning itself to play a more dominant lead on the European stage—to resurrect the Reich that had been humiliatingly defeated in two world wars. Like its predecessors, the treaty altered the face of Europe, opening the door for more talks on German unification until, 20 years later, that unity became reality.

What You Should Watch

Both Russia and Germany will continue to develop the other’s geopolitical muscle—until, as history tells us, both are strong enough to be threatened by the other!

We have warned of this for years, as Mr. Armstrong did before us. Now, other leading news analysts are seeing the trends. One Stratfor analysis stated: “For observers of the past, this underlying state of affairs cannot but sound a bit familiar. … [T]he last time the German economy was in such dire straits, Germany militarized—and signed a treaty with Russia known as the Molotov-Ribbentrop accord. With its eastern flank secured, Germany then was free—for a time—to set about launching World War ii” (April 7).

When an overt non-aggression treaty is signed once again between Germany or the EU and Russia in this new phase of global politics, history will be written before our eyes. Not only will it bring both the EU and Russia to powerful new heights as global players, it will mean that Europe has again secured itself against an attack from Russia and will be free to pursue other aggressive objectives.

We can see the groundwork for such a treaty being laid now.

Where Will That Lead?

As Herbert W. Armstrong wrote in a coworker letter 44 years ago, “United, these European nations can protect themselves from Russia. They will make a deal with the ussr—a non-aggression pact. Then the Germans, who will dominate, remembering it was U.S. power that twice defeated them in world war, will attack the United States, destroying our cities.So says prophecy!” (Oct. 23, 1961).

Bible prophecy states that the U.S. and Britain will be trampled by Europe. In fact, God singles out Assyria, modern-day Germany, as the key player in carrying out this destruction (Isaiah 10:5).

Only by Germany forming a strategic alliance and signing a non-aggression pact with Russia will a German-led Eurobeast come to power as prophesied. God prophesies that this European bloc will exert unmatchable power over the Western world for 2½ years (read our free booklet Russia and China in Prophecy for more on this).

A German-Russian alliance, however, is a partnership that history—and prophecy—shows us will never last, despite its short-term benefits in strengthening both parties. Just as in World War ii,Russia will have its part in Germany’s downfall. Bible prophecy shows that Russia will align with Asia to counter the growing dominance of the unchecked European power. This will mark the end of the coming non-aggression treaty.

A Russian-EU alliance or treaty would strengthen Russia to be a contender on the world stage—one that will eventually challenge Germany and Europe in the greatest military conflagration the world has ever seen. This conflict will accelerate the world’s race toward a nuclear Armageddon—creating such terror that only the return of Jesus Christ could provide rescue.

Remember, the Plain Truth in 1962 said another Rapallo pact would signal “the doom of the United States and Great Britain” and be “the greatest disaster which could befall the West.”

We have already seen a non-aggression pact—signed during the Cold War—which sped along the reunification of Germany and hurtled Europe toward greater cohesion—starting a chain of events that will fulfill the Plain Truth’s predictions. We can also expect a similar treaty in the imminent future paralleling the Ribbentrop agreement—such as was signed immediately before World War ii. These accords will culminate in World War iii!

Watch the growing relationship between Russia and Germany. History cries out a strident warning about the results of such dangerous liaisons.

Church Unity Must Be on Vatican’s Terms

From the July 2005 Trumpet Print Edition

After Anglicans and Catholics finalized details on a joint document regarding Mary, it was clear that, when it comes to reconciling with other churches, there will be little to no compromise on the Vatican’s end.

On May 16, a joint group composed of Catholic and Anglican church members published a document, six years in the making, proposing that Anglicans accept Roman Catholic teachings regarding Mary.

If accepted, the proposals, agreed by theologians and prelates of both churches, would “backtrack on centuries of Anglican dissent over the place of Mary in the Catholic Church by giving credence to dogmas rejected in the Reformation” (Times Online, May 17). The document states there is “no continuing theological reason for ecclesial division” over this issue.

A Catholic bishop who served on the Anglican-Roman Catholic International Commission, which published the document, said: “What we have done is put down a paving stone on the road to Christian unity.”

With the election of Pope Benedict xvi, church unity has gone to the top of the Vatican agenda. The second week of May saw the Vatican praising the Anglican archbishop of Canterbury for adopting a stance over sexuality akin to the Vatican’s. From May 9 through 16, the secretary of the Pontifical Council for Promoting Christian Unity headed a Vatican delegation (the largest ever) taking part in the Conference on World Mission and Evangelization in Greece. Earlier the same month, Pope Benedict xvi sent a message “of consideration” to France’s main Protestant church, the first time this has been done.

These moves toward church unity, however, also reveal on what terms that unity will come. As Times Online observed, “The Mary document will reinforce fears among evangelicals that the Catholic Church is prepared to consider unity with the Anglicans strictly on its own terms” (ibid.; emphasis ours).

EU Building Reputation

From the July 2005 Trumpet Print Edition

World politics can be extremely confusing. Correctly judging the motivation behind a nation’s foreign policy is a particularly challenging exercise. So what’s behind the European Union’s interest in the North Korean nuclear crisis?

In May, the EU announced that it wants to play a role in the disarmament of North Korea, acting specifically as a buffer in negotiations between Pyongyang and the United States.

While this seems like an altruistic gesture by the EU, is it really necessary? Five major nations—including Japan, Russia and China—are already working to stop North Korea from manufacturing nuclear weapons. The EU would simply be another cook in an already busy kitchen.

One constant in geopolitics is this: Self-interest is the defining motivation behind the foreign policy of nations. Assess the EU’s drive to be involved in the North Korean crisis in light of this constant, and the reason for European involvement becomes clear.

“This [North Korean negotiations] is where the EU can step out on the world stage as an institution. The EU wants to create a reality for itself as an international actor” (Stratfor, May 19; emphasis ours). By seeking a role in the North Korean nuclear crisis, one of the largest geopolitical flash points on the global scene, the EU is looking to build its reputation as an influential and global superpower.

Until its own constitutional crisis is solved, it will be difficult for the EU to speak as one voice in its own internal affairs. Hence the strategy to overcome this credibility vacuum by increasing its involvement in broader diplomatic theaters.

In North Korea, the EU may speak as a united power since the outcome barely affects internal European politics. These nuclear talks are the perfect avenue by which the EU can gain global publicity as a benevolent and active participator in world affairs. For the EU, a side benefit is the potential that successful EU involvement in the crisis could diplomatically and politically isolate America.

In light of the current political and economic tension that exists between Russia and America and China and America, it’s possible that any measure of success that might come from the EU’s involvement in North Korea could go a long way toward these nations looking more to Europe for direction in future crises.

There is a lot we can’t know about this issue. It’s possible that there will be no room at the table for the EU in the discussions to disarm North Korea; the EU may even hinder successful negotiations. But there is one absolute we can be sure of: The EU is looking for every opportunity to project itself as a leading global power, and the North Korean nuclear talks are just that.

Watch for the EU to become more involved with international affairs and build its reputation as a global power, as well as marginalize American influence in world affairs.

Blair’s Power Weakened

From the July 2005 Trumpet Print Edition

The May British elections showed a waning support for Tony Blair’s pro-EU government.

Though Mr. Blair is still prime minister of Britain, his Labor Party lost considerable authority in Parliament—making its unprecedented third term likely to be more of a lame-duck administration. Going from a 161-seat majority to a 67-seat majority within Britain’s 645-seat Parliament, Blair’s party drew only 36 percent of the vote—the lowest percentage of the popular vote in the country’s election history. Gaining in popularity is the Conservative Party.

Many attribute Blair’s loss of ground to his position on the Iraq war. While that may be part of it, we cannot ignore that a growing dissatisfaction exists among Britons with the European Union. The Conservative Party, which gained 44 more seats this election, rarely used the Iraq issue in its campaigns against Blair—but it is known for its heavily Euroskeptic platform.

British sentiment against the EU is swelling. The fact that Mr. Blair represents the staunchest pro-Europe position is likely to be yet another major strike against him—particularly in light of the proposed EU constitution being decisively rejected by the French and Dutch in recent referenda. With the future of the Union appearing shaky, the Conservative Party may look like sensible refuge for many Britons—distancing the country from the Continent even more.

For more on Britain’s part in a united Europe, see our July 2004 article “The Defining Moment Approaches”