Peak Oil

Collapse is Starting

President Obama promised “Hope and Change” when he was elected; he has definitely managed to deliver “Change,” and last week he was quoted saying “Hope” doesn’t happen overnight. Change has come at us like a freight train and repeatedly I have our covered loss of civil liberties, now our economic future has been stolen by Washington:
– The debt deal promised cuts, but the debt will increase by $8 trillion dollars to $23 trillion by 2021. “Why?” Because the government calls a “cut” less spending than was projected for the following year, not less than is spent now.
– The day after the deal passed the government spent $236 billion, or $750 per citizen, in a single day. For my family of six, the debt increased by $4500. I don’t have an extra $4500 lying around, do you?
– Standard and Poor’s downgraded the U.S. credit outlook for the first time in history on August 5, 2011. To claim this is a political move would underscore the objectivity of credit reporting.
– The official Chinese news agency commented, “China has every right now to demand the United States address its structural debt problems and ensure the safety of China’s dollar assets.”
– Food stamp usage hit a new historic high last week, 45.5 million, up from 26 million in January 2007, and 32 million in January 2009 when Obama took office.
– According to the Census Bureau, homeownership fell to the lowest level since 1998, 65.9%, and if delinquencies are included the numbers match 1965’s level of 59.2%, according to Morgan Stanley.
– Housing prices have dipped 32% since they peaked in mid-2006, again for the 50th straight month realtors call a bottom to the decline.
– Weekly first time jobless claims continued their record setting levels above 400,000 for the 17th straight week.
– The average length of time to find a job has surged to a new record, 40.4 weeks.
– The labor force participation rate fell to a new low, 63.9% not seen since the early 1980s.
– Including those who quit looking but desire employment, the broader unemployment rate reached 16.1%.
– Gold topped historic numbers last week, closing above $1660/ounce.

I believe President Obama and Congress sealed their political fate last week and I am hopeful revolution will begin with the election of leaders, not self-serving politicians in 2012. A quick read of history will point to failed governments following the same path as the United States. We will not have societal Armageddon tomorrow, but our standard of living, and more importantly future generations’ standard of living, will continue to decline.

August 14, 2011 by Big Government Depression Great Recession Obama Peak Oil

What lifestyle changes would you make?

Check out this house. Is it worth it? No mortgage, living happy without the fear of a bank taking everything. Depending on where you have been in the last two years financially you may not understand the changes taking place in America.

The Greatest Depression is continuing in a rapid downward spiral with the plummeting value of home prices. Too many Americans have tied their fate to the future of their home. Since 2008 home prices have fallen 33%.

What is a house? How many people thought they were living the dream of a McMansion – 4000 square feet and a $4000/month mortgage?

I will continue on my 1.6 acres of rural countryside – chickens, woods, space, and simplicity. Life is easy when you have less.

June 7, 2011 by Depression Great Recession Peak Oil preparedness

1970s versus 201Xs

The kids wearing plaid pants and striped shirts with long hair watching the “Brady Bunch”, “Adam-12” and “Emergency” are the men and women running our government today. It seems these “kids” have no recollection of the politics or monetary policy of the 1970s, instead only remembering the Bicentennial, bell bottom jeans, and Nerf footballs. A careful examination will show a decade that suffered an energy crisis causing an immediate recession. The same happened in 2008 when oil prices rose rapidly to $147/bbl driving our economy over a cliff to financial Armageddon. Nixon removed the Gold standard in 1971, and the Federal Reserve enacted new monetary policies to bring recovery. No radical method helped Nixon or Ford, and a hopeless Democrat was elected; promising prosperity and unable to deliver as we added the word “stagflation” to our vocabulary. As America entered the 1980s, after seven years of lackluster growth interest rates rose rapidly crushing the housing recovery. I remember my own parents struggling with 18% rates, job loss, and our manufacturing shift overseas as Chrysler sought a bailout and American’s learned “Made in Japan” meant quality compared to our union produced assembly lines.

For ten years inflation was high, reaching 13.5% in 1980 and unemployment soared above 10%, but like today the same policies were held: Federal spending never slowed, and tax increases for the rich were proposed. Gold prices accelerated and fueled speculation the end was near and the economy would not survive. Talk of wind mills, solar panels, energy conservation, and self-sufficiency abounded. Reviewing newspapers from the early 1980’s it is easy to spot Tip O’Neill’s 100-plus Democrat majority was adding to federal spending faster than the revenues received, not unlike the recent Pelosi dynasty. I found one article stating for every 1% increase in unemployment Federal spending deficits increased by $25-40 billion during the 1982 recession because unemployment drives down revenue and causes government to spend more.

Many argue the cornucopianism of Ronald Reagan saved the economy through supply-side tax cuts. I would argue a direct correlation should be made between recovery and oil prices as the UK’s discoveries of North Sea oil increased supply and probably fueled the recovery of the 1980’s and 1990’s. The 1970’s are remembered for Disco and parties, instead we should truly understand the damage of failed economic policies. We are three years into the current economic decline and the kids I knew now run Congress; I would offer 1970’s history provides more answers than the academic speculation used today.

February 2, 2011 by Big Government Depression Great Recession Peak Oil taxes

Carbon Copy America

Carbon Copy America

My wife and I came down off the mountain this weekend and visited “civilization” to engage in the most popular sport in America: leisure shopping. Visiting the Mall of Georgia is like visiting Altamonte Mall. The similarities start with traffic lights, waiting to make turns, localized strip malls with a variety of specialty stores, car dealers using balloons to lure naïve consumers, and franchised eateries overfeeding overweight patrons. My first inclination is to shop locally, like I did in New Smyrna at Coronado Hardware or eating at the Dolphin View, but lacking choices I was forced to head to the Mall.

My intent here is not to complain about the Mall, but to comment on willfulness to trade perceived success for lost identity. I have previously written about the “good old days”, circa 2006 during the boom, and also commented on the loss of small towns in my column, “Taking Back Roads.” At the end of our shopping expedition on Saturday my wife, LeeAnn, said, “we could be anywhere in America. Looking around the stores and architecture are no different here or in Altamonte Springs, Ft. Worth, or Minneapolis.” Her observation was spot on; we chose the economic path that brought our destruction and it started in the early 1990’s. Thinking back to the 1970s and 1980s, appliance and electronics stores were locally owned; Home Depot, Lowes, and Best Buy did not exist except in their original markets. Wal-Mart was a regional Arkansas chain, not a megastore found in every town in America. Even the Mall’s department stores appeared quirky to the out-of-state traveler as they represented decades old local businesses like Burdines, Daytons, Wanamakers, and Gimbels. And of course, the out parcels of Linens and Things, Old Navy, and Michaels did not exist.

In the 1990’s with easy access to money, a rapidly rising stock market, low barriers to brokerage services and do-it-yourself investment attitudes the economic boom erased our identity. Local architecture and business acquiesced to national franchises and bland buildings void of character delivering mass-produced Chinese merchandise meant to symbolize success to anonymous strangers. On a local level builders nationalized and did the same, trading character for mass production of McMansions with bathrooms larger than the prior generation’s living rooms. New Smyrna Beach and Cleveland, Georgia lag behind, but yet both claim progress by advancing box stores and abandoning local business heritage. Just push “Copy”, America has lost her character.

August 18, 2010 by Economic Development Great Recession Mainstream Media Peak Oil Stupid People

Redux

Redux

The last few weeks I have touched on three key topics and want to revisit them today as each has made headlines, reiterating my concerns, or in one case giving hope and contradicting my thoughts. Last week I touched on energy policy, the failure of the Department of Energy to meet its mandate by President Carter, and cornucopian ignorance by conservatives. The prior week I alerted you to my concern over failing state governments. Three weeks ago I hit on the issue of entertainment and sports prevailing as the interest to Americans instead of citizenship. I typically write this column on the weekend preceding publication so it has been fascinating to watch thoughts, predictions, and trends materialize.

Snowstorms battered the mid-Atlantic and northeast again this past week reiterating my focus on state governments running budget deficits and the upcoming economic malaise. The same week I wrote my column the governors of the states met and voiced concern over impending shortfalls. In world headlines, Greece continues to make the news, but the state of California is the eighth largest economy in the world and remains on the brink of failure. On the U.S. east coast snowstorms may bankrupt individual states. For example, Georgia has no budget for snow removal but has spent $5 million. Virginia has suffered; outspending its $79 million snow removal budget by another $70 million. Those are critical monies ordinarily available for social services, schools, libraries, and road maintenance. In Virginia, the state Continue reading…

March 3, 2010 by Big Government Peak Oil

Energy Policy

America’s energy policy over the last 40 years has been lacking direction, but President Obama took a big step forward last week. Prior to 1972 America was an exporter of oil, not only supplying all of our own needs but exporting oil to other countries. It is hard to imagine, but in the early 20th century oil literally flowed to the top of the ground in places like Pennsylvania, no wells, no deep sea drilling; it could be had by scraping it off the ground. In 1956 a geophysicist, Dr. M. King Hubbert predicted by 1970 America would reach its “peak”, the point where U.S. oil production would peak. However, the concept of “Peak Oil” is scoffed at since we continue to discover more oil reserves, dismissing that every new barrel costs more to obtain than the previous. In 1973 the OPEC crisis catalyzed our country’s quest for energy independence; seven presidents since influenced America’s energy policies, but yet we remain hostage to foreign sources.

In 1977 President Carter created the Department of Energy; a bloated bureaucracy failing to meet its original mandate. Specifically, the DOE was created to ensure “the U.S. will never again import as much oil as it did in 1977.” At its creation, America imported 8.6 million bbls/day, now we import 10.4 million bbls/day. The DOE has grown from zero employees and zero budget to over 16,000 taxpayer paid civil servants, 100,000 contractors and an annual budget of $28 billion. Today America remains as dependent on foreign sources of energy as in 1977. Contrastingly, President Reagan brought a different view to office regarding energy. Sadly, his view is one that has stayed with Republicans during the last 25 years. Regan, a cornucopian, believed an innovative, technological solution, would appear in time to save us from the tragedy of our misdeeds. Of course, President Reagan, and his British counterpart Margaret Thatcher, were saved by the huge North Sea oil discoveries in the 1980s. Thus, the UK had a thriving economy and postponed energy policy decisions and likewise America did the same.

In the summer of 2008 every American received a wake-up call to energy policy. Stunned, we watched the price of gasoline at the pump soar past $4.00/gallon, considered buying “Smart” cars and left the SUV in the garage. Of course, this brought out the charlatans and snake-oil salesmen seeking government monies and investors for wind farms, off-shore wave generators, battery powered cars, oil sands recovery, and the now famous food-for-fuel, or ethanol disaster. However, grabbing a calculator and doing some math will show many of these methods require more energy than produced, do more environmental damage, or are just silly when considering large-scale implementation.

This past week President Obama made an excellent decision regarding energy policy; announcing $8.3 billion in loan guarantees to build two nuclear reactors in Georgia, the first in the U.S. in 30 years. Ironically, it is a decision that defies his party’s typical philosophy regarding nuclear energy and I am certain the likes of Jane Fonda, and the rest of the anti-nuke crowd, are troubled by this. However, the Hollywood crowd driving Toyota Prius automobiles must understand their energy requirements will come from the “grid”. President Obama, as a Senator and candidate, has consistently supported nuclear power. I would suggest the President add geo-thermal energy to the quest for clean-energy independence. With the unspent stimulus monies President Obama could focus a moonwalk like quest on energy and lead us out of recession and away from dependence on our enemies in the middle-east and South America.

March 3, 2010 by Big Government Peak Oil