Sledding down the slope of Peak Oil

January 2, 2008 (Gregorian Calendar)

Today the price of crude oil hit $100 a barrel. IT probably won’t stay at that level for long, but don’t expect it to drop below $90 again ever. That means the perceived and accepted value of a barrel of the all-too-essential sticky black stuff has doubled within a year. We have a hit a benchmark that we weren’t expected to hit this soon; Doesn’t it remind you of those experts who said it would take the polar icecap a hundred years to melt? ‘Tipping point,’ anyone?

And, now that the $100 line has been crossed, despite our best efforts to prevent it, the next first down flags are already being staked out along the sidelines: $110? $125? $150? $200? Watch those chains get moved. Of course by the time we reach the equivalent of $150/barrel the price won’t be measured in dollars any more. It will be calculated in Euros or the yuan, or the renminbi, aka RMB, aka Chinese currency. By the way (btw): you might want to make yourself familiar with those words because they will be cropping up more frequently during the next couple of years. They may not appear on the front pages or be mouthed by the talking-heads on the evening ‘news’ of course. After all, we really don’t want to scare the folks in Oklahoma, or the suburbs of NYC for that matter, too much, too soon. But, in a few months, they, yuan or renminbi or RMB will turn up on the business pages, those pages ‘inside the fold’ and usually read only by the moneyed cognisanti. Also FYI, here’s some other info that didn’t make the front page of the NY Times (at least I didn’t see it there): the RMB has climbed 6.9 percent against the dollar in the past year AND China's trade surplus with the USofA soared to 238.13 BILLION U.S. dollars in the first 11 months of 2007. Those figures come from the US General Administration of Customs. That’s 52.2 percent more than the same period a year earlier. I could be wrong but I don’t think GWB mentioned that bit of economic good news in any of his recent ‘the US economy is doing just great’ chats. Oddly enough, that $200 plus billion is less than what we have spent so far on the ‘war’ in Iraq. Also FYI; in case you thought even a symbolic gesture on your part might help to balance this inequity, I hate to be the one to tell you, but it’s probably too late to send back all of those toxic PRC-produced, but designed in the USofA, toys since your kids have probably already gummed them into a pulp. The PRC has a very strict no return policy, as do we. Since we enforce it why shouldn’t they? Right now you might want to take a moment to check on your kids just to make sure they aren’t throbbing into some sort of fit in the far corner of the family room…of course the fit may also have been caused by the ‘food’ in the snack pack they have just eaten, thanks to the Nestle corporation or some other beneficent entity. See, it really is “a small world after all.”

What does it all mean? In both the short and long run it probably means the beginning of the end of USofA domination in the financial markets as well as most commodity markets. It also means that we may no longer have the role of leading actor on the political stage in the real world. Of course, over the next decade or two, there will be occasional spasms while we, now cast in the role of former dominator, thrash about in our death throes. As the drama plays out there will no doubt be an act or two of bathetic whining and posturing by whatever US ‘administration’ is in office. Remember: It’s always important to look good in front of the hometown audience. There may even be a brief few years, no more than a decade, when it looks as though our USofA character, let’s call him ‘Rocky’, that plucky heavyweight fighter, garbed in red-white-and-blue and bristling with arrogant self-serving bluster and military muscle, might stage a comeback. We may even occupy a country or two for a while. But this will be only a brief, and probably very bloody, reminder, to the rest of the world (i.e., everyone not USofA) of just how self-aggrandizing, nasty, greedy, racist, ruthless and murderous we really were/are (despite our perfect white-toothed smiles and sexy music videos). They will also be reminded by our behavior of just how very much they really hate and despise us. After all, no one loves a bullying over-lord. And after the shit has truly been scattered by the fan, what then? After that, we will be lucky if we get even table scraps. Hell, more likely than not we’ll have to scramble just to pick a few crumbs before Ecuador snatches them. For a while we may be able to push Canada or France around; but in the long run, no self-respecting nation will want to sell us anything, let alone make anything for us, even if we bribe or beg them. Then we’ll begin to discover what the rest of the world has been going through while we partied on. Hoo-Ha!

The initial stages of all of this are beginning to unfold right now. And while there are probably strategies and plans galore in the backrooms, NO ONE IN THE UPPER ECHELONS OF THE FEDERAL CORPORATE GOVERNMENT of the USofA IS EVEN TALKING PUBLICALLY ABOUT IT!! Why? Because they are busy trying to convince us that none of it can possibly happen; not to US, they assure us. Some of them truly believe their own BS; they truly believe we are immune from the laws of natural relationships and the physical universe. Yes, yes I know that all of this ranting sounds truly unhinged. And even I hope it is. But I think all of us know, in our heart of hearts and brain of brains that it isn’t. All of this comfort and convenience we enjoy and take for granted isn’t going to unravel right away so certainly a few of us will get to enjoy some of the fruits of our social security checks and our 401-Ks for a few years. But you might want to suggest to your grandkids that they should consider beginning some courses in Mandarin and Hindi. If not this week, maybe next. Just don’t wait too long. It's already too late for me and besides I'm still trying to learn Spanish.