Thus Believeth New-Think

Today I will tie together the last 3 posts and tell you what to expect from the future, economically speaking.

How does all of this fit together? Yesterday's series of if-then statements are a useful tool, BUT, it will not be that black and white. Right before oil demand began being destroyed by the tanking economy, demand had been slightly exceeding supply. Customers (mainly very poor ones) were priced out of the oil consumption business and those who could afford to buy what they could not (us) bought it. That is why oil was so expensive. As a consequence of the high prices, though, we were able to fund a LOT of projects to find new oil and get it out of the ground (or sand or shale) as quickly as possible. People like T. Boone Pickens began rolling out multi-billion dollar alternative energy projects like thousands of giant wind-mills. People naturally used less because they could not afford it.

Now people are losing jobs and having trouble getting new credit cards....the cost of oil has drastically decreased. The government has shown it will do whatever it takes (including change the rules in the middle of the game and ignore the constitution) to prop the economy up for as long as it can. Actually, they are surprisingly good at it. It is amazing how, when the money stops flowing, you see who is really loyal to who…that is, if you are paying attention.

Anyway, it appears to New-Think that a full collapse of the U.S. economic system is still a very real possibility within the next year. If you are rolling your eyes at that, please think back and remember how you rolled your eyes when we told you oil was going over $100 and the dow was going below 10,000. Turns out those were very conservative predictions. If a systemic collapse happens, all of the following predictions go out the window.

If, however, the system holds up.....

The price of oil will continue to fall for the very short term and cause numerous project cancellations in the oil and gas industry and it will bring the “alternative” energy industry to a near stand still. Especially after 6 months when everyone forgets what $4 gas was like. The economy might not get much better, but eventually, demand will increase (either from very low prices or a more stable world economy) and we will find ourselves worse off than before because we were still, after all, using millions of barrels or oil every day while cancelling the energy projects we needed to sustain the practice. The price of oil will once again skyrocket…until something else breaks. Then we’ll do it all again. Only every time it will be more painful. Welcome to the long emergency. Don’t borrow any more money. Get out of debt now. Don’t borrow any more money. Get out of debt now.

I mentioned politics in the original post title but didn’t say much about it at all. No, your candidate, whoever he or she is, cannot fix this. They will keep telling you/us they can, though. We’ll hear a lot about a lot of things, and I’ll keep getting e-mails about the stupid things politicians say to win votes…but won’t actually work, asking me if it is true. I won’t say most politicians don’t care BUT I will unequivocally declare that most politicians (especially in the legislative and executive branches of the current administration and the next) do not yet fully understand these issues. If I have to hear about the Bakken formation or Utah oil shale one more time from one of these folks I’m gonna…….It doesn't matter who you voted for in regard to energy and the economic issues.....in these regards democrats and republicans are one large monolithic, idiotic party. By the time the ballot gets to you the choice is primarily an illusion.


Later.