The NEXT Big Crisis

The next crisis is coming…

I know, you are thinking, “well that stinks because I’m still stuck in the LAST crisis!” Unfortunately the new crisis is only going to exasperate the last crisis.

Sorry.

The new one is oil. OPEC has been lowering their output to try and boost their profit by lowering the supply to just barely meet the demand, which had fallen due to the recession. However, given the lower oil prices and a perceived bottoming out in the economy, demand has increased. China in particular has started to pick back up significantly. Combine increased demand and a falling dollar and you get… higher prices. OPEC couldn’t be more thrilled as oil prices go north of $70 a barrel. The Saudis are talking about increasing output once the price goes above $100 a barrel. You may not be following the oil prices, but I’m positive that you have noticed the gas prices. I paid over $2.50 a gallon this morning and was none too thrilled to do it. At their last peak oil was around $150 a barrel and some are predicting that it will reach $250 a barrel this time. How about $4 gas… maybe $5 or more? That’s a huge chunk of the average family’s pocket book. People will start screaming and complaining. They will start blaming Big Oil for all of their greedy, evil profits.

And that’s when the government will move in to save the day. Well, much like they saved the day on the housing market, the automobile industry, and the credit card companies. You know all of those glorious government programs! That doesn’t mean that they will actually do anything that is going to help you, but they will try and make you feel better because they are doing SOMETHING, regardless of how inept and unhelpful it is.

All the while they will ignore people screaming slogans like, “Drill here! Drill NOW!” They will use platitudes like, “that oil won’t have any effect for five or more years.” Completely ignoring the fact that if they acted even two years ago, we would be less dependent on OPEC TODAY! So think about it, even as we are developing and discovering some incredible new GREEN fuel, we could be tapping into our oil reserves, just in case the next fuel doesn’t hit the market in two, three, or even ten years.

But tapping into our natural reserves would help the problem, and quite frankly, why would they want to do that? After all, Rahm Emanuel will tell you, that you need to take advantage of a crisis, and right now the government “needs” the money. What better way to win favor with the average guy, than to take revenge on the greedy Big Oil companies and slap them with a windfall profit tax? You can say that you are fighting the big corporations for the little guy. You can say you are being fiscally responsible by decreasing deficits (well, short term ones anyway). Or you could say that you are going to take that money and provide funding for new GREEN technologies. Sounds like a winner either way right? The government fights the solution to the problem (expanding supply through drilling) all the while blaming Big Oil, and taxing their profits out the wazzoo in order to fund outrageous and irresponsible spending.

Way to take advantage of the crisis.

Of course eventually the people will wake up and realize that all that is happening is that they are being slapped with a HUGE tax, that gets filtered through the oil companies and finally passed on to the government who takes a penny from the pot and passes that back to the people through different social programs or ‘tax cuts’, and expects the people to love them for it. When they do finally follow the money, maybe they will head to the ballot box and pick the guy talking about lower taxes, smaller government, more drilling, and REAL fiscal discipline.

The next possible time for that is still more than a year away. A lot can happen in a year. Just look at the last five months. During that time the government has seized control of two of the Big Three, nationalized a good chunk of the mortgage industry and a few of the financial institutions, and now is looking to nationalize our healthcare system. Along the way they have borrowed HALF of every dollar they have spent.

Let me look into the crystal ball of my own nightmares and make a rash prediction. Cap and trade will die the way it is right now. It will go quiet and will not see a vote. Six months from now gas will be approaching $4 a gallon and people will be mad. That’s when they will revive cap and trade but as part of the measure they will nationalize the oil companies to “return the resources of the people back to the people”. They won’t use the word “nationalize” they will call it something like “more stringent and responsible government management of our natural resources”, but it will effectively be nationalization.

2010 can’t come fast enough.