jonreagan

High Steel Prices: A Preview of Peak Oil

A previous post emphasized that finding our way out of this mess will take "compromise". He's right, but I'd add the word "sacrifice" as well.

Jimmy Carter was ridiculed in February of 1977 when he made the "cardigan sweater" speech, attempting to pave the way for a national energy policy. While I disagreed with many of his proposals, it was an effort to begin a dialogue; good luck! The following week, Democratic Senate Leader Robert Byrd (king coal!) dryly remarked that the new President's proposals would be taken up sometime "in a year or so". So much for trying to be proactive on major issues. This is a reactive country, which waits for "crunch time" before taking serious action.

I'm a "recovering Democrat", exiled from the party because I believe in free trade and agressive exploration for new sources of energy. My former colleagues have a problem with just about every energy source available: nuclear, coal, oil...some of them even hate natural gas! These people don't want to hear about "compromise". They are the "rule or ruin" segment of American politics.

At the same time, my new "right-of-center" friends don't want to hear about "sacrifice". I think blowhards on Capitol Hill look ridiculous complaining about Rex Tillerson's salary...but I DO wish there would be an honest debate about raising fuel efficiency standards. But that would be difficult, and this country is more into lazy, headline-grabbing solutions than they are doing anything which might be considered "hard".

Jeff Mackey of CNBC's "Fast Money" nailed it earlier this week, in cautioning against rushing head-long into solar stocks. They move up rapidly in tandem with increases in the price of crude, but as Mackey put it, "as soon as the price of oil recedes even a little bit, everyone in this country will go back to buying their Hummers, and solar will go to the back burner again!" Unfortunately, I think he's right on.

After a bridge collapses, you hear talk for a couple of weeks about the USA becoming the "infrastructure country".....when a big story breaks about pitiful SAT test scores, there's buzz about us becoming the "education country". But again, we're essentially a country with a short attention span, that reacts to major crises, and then forgets about them two weeks later.

And don't count on any leadership from our politicians, either. I hear lots of grousing about rising grain prices, and food riots in the rest of the world. And then they proceed to pass a farm bill with an insane ethanol policy--a grab bag of "goodies" to the big Agriculture companies.

Unfortunately, the author's rather bleak forecast is right on the money.