Tuesday, June 30, 2009

future shock

A really important post over at the oildrum that outlines what I think
will be happening over the next few years.

We now appear to be bumping our heads against an invisible ceiling, where the decline in real energy meets our pain tolerance for high prices. When gasoline hit $4 last year, it created real demand destruction because people simply couldn’t afford it with their evaporating dollars. Likewise, the spike in natural gas and coal prices ultimately translated into such high prices for basic building materials like cement and steel that demand was curtailed.
The economy is going to be squeezed steadily lower by decreasing availability
of energy. As energy prices increase, the economy spirals downward which crashes oil prices
leading to reduction in availability. I think this cycle will be repeated over and over in the coming months and years so that the business cycle will lurch from ´greenshoots´ to further
deepening of the depression.

We´re already seeing this at work where it is slower so that prices are coming down (the crises!),
but we´re still kind of busy because layoffs are cutting out the cushion of people that allow us to take advantage any extra business. None of the oil industry can ramp up in matter of weeks, it takes at least months to get tools and people, as soon as tools and people arrive things are slowing down again.

What the government should be doing should be a crash program to provide energy self sufficiency in the USA. Nuclear, Solar, fusion, oil and gas. Instead this cap and trade bill will probably finish the destruction of the domestic oil and gas industry if it passes the senate.
(I haven´t read it, but since neither has the house of reps I´m guessing it will be a giant boondoggle with lots of poorly thought out ideas chock full of unintended consequences).

What the bill needs to do is drive conversion of cars to natural gas and hybrid. Construct dozens of new nuclear power plants. Create dozens of plants to construct PV panels and wind turbines. support the drilling of natural gas in the USA. I´m guessing that it will drive some construction of wind turbines and pv panels that are made in china, but not much else.

We´re getting down to nut-cutting time as far as decisions go, the question will be what should individuals do to ride out the storm with some kind of style. I think the key will be personal sustainability, the ability to generate some amount of power and food as electricity rates skyrocket will be important. Anything imported will be prohibitively expensive and or the value
of dollar denominated accounts will go toward zero.

I´m personally stuck with one monkey´s paw wrapped around a job I´m too afraid to let go of and one paw grasping around looking for another. I think I´ll be forced by circumstances to take
my own advice when I get downsized in the near future.

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