Oil -The Economic Snowball
How Will China"s Energy Needs Affect the US?:
The Awakening of Beijing. In his recent article The Integration of Giants Into the Global Economy, Gary Saxonhouse argues that China’s needs could create potentially destabilizing demands for energy products. "Growth of such demands could easily cause the price of a barrel of crude oil to increase beyond its recent rate of over $140.00" which is twenty times its average cost during the 1990s.
" Off the Grid "
Continued energy price spikes could well send shockwaves throughout the US economy, as the average consumer is not immune to ever-increasing hikes at the pump.
Nor is the country’s public transportation infrastructure as progressive and developed as Europe’s, and able to accommodate a fundamental shift in our commuting model.
What we learned in the aftermath of Hurricane Katrina is that when supplies tighten and demand remains the same, the price of a gallon of gasoline is sure to rise. And, as increased gas prices eat up more of consumers’ wages, there is less disposable income for other goods. When the higher cost of home heating oil is factored into the equation, it becomes a double whammy. This is the beginning of a downward economic spiral.
As companies across the country see a drop in consumer spending, their own performance declines correspondingly. Nor are consumers the only demographic impacted by higher gasoline prices. In the United States a significant amount of consumer goods are transported long distances by highway, rail and airfreight. Increases in these transportation costs in turn drive the cost of consumer goods up.
The net result is that the average American has less money to spend, and the price of items is more expensive.
As the effect snowballs, many retail and production companies’ performance would begin to suffer. Forcing them to cut their expenses in order to meet earnings expectations, the most fluid of which is labor. And on it goes.
Energy Independence Is the Solution:
During President Bush’s 2006 State of the Union address, and his many speaches since then, on energy, he spoke of our need to limit foreign oil requirements. However, drilling in ANWAR and prospecting other sources of fossil fuels in the lower 48, is not the solution. A tremendous amount of research has been conducted over the past several decades on alternative fuel sources such as hydro, wind, solar, and bio fuels. The momentum to integrate these technologies has stalled though, given the tremendous influence that traditional energy companies, Detroit, lobbiest and the oil companies have in Washington. They have positioned these opportunities as economically unviable and destructive to the American economy. The argument can be made though that by developing and mainstreaming these solutions, we can gain a greater measure of energy independence as well as grow our economy by selling these solutions to developing nations across the world who lack natural reserves of fossil fuels and the economic where-with-all to purchase their energy supplies on the open market.
The energy policies that Bush proposed in his State of The Union Address, and the energy legislations of Congress and the Senate, are inadequate, and will swell America’s oil dependence on the increasingly hostile and unstable Middle East, and continues to create peak profits of traditional utilitly companies and big oil companies, and big business, such as T.Boone Pickens, at the expense of consumers and endanger America’s national and homeland security.
This last election, Senator Obama was elected President. During the 18 months of his campaign he promised to create jobs and to put our economy on a path to recovery. Now that President Obama is in office and in charge of our economic and financial disaster left him by Bush, Congress and the Senate, President Obama and his economic team developed an economic stimulus recovery plan. However, in his attempt to please everyone, he has taken what was a fairly sound plan and watered it down and deluted it to the point of all spending and tax refunds and only chump change for infrastructure, (which is what puts people back to work) and alternative energy. Tax refunds will do nothing for our economy. Other items in the now so called stimulus plan such as art museums, re-seeding the lawn at the national monument etc., do not belong in a "stimulus" plan. Items such as those belong in a states budgeting plan. President Obama needs to step away from the run-a-way economic express to a depression, and go back to his original plan of "infrastructure" such as roads, bridges, out dated grid systems that go down during a normal winter storm leaving millions of people without power and jeopardizing consumers health, safety and indeed, their very lives. If we are incapable of protecting ourselves from ourselves, then we don't stand a chance against other dangers such as terrorist.