What Happens to an America Built on Cheap Energy?
What happens to an America built on cheap energy when energy is no longer cheap? It’s a question that most Americans do not want to confront. Especially the slick talking politicians.
The fact is most of the way America was built depends upon cheap energy supplies. The love for the automobile, the vast suburbs that surround America’s majors cities, the neglect of a high speed railway system, huge suburban shopping malls and office parks, American agriculture with its dependence upon fertilizers, pesticides, and massive diesel fuel driven combines and tractors, the aviation industry, and the trucking industry, all were constructed on the back of cheap energy.
Now that energy is not cheap what will happen to the American lifestyle? Optimists look towards the development of alternative energy sources. Some of these possible aids to the energy crisis will be helpful, such as solar and wind power, and some will be counterproductive, like ethanol production using corn as the energy source. However, in time the optimists will learn that we are nowhere near to replacing a significant percentage of our total energy needs with alternative energy sources. Time is already up. We are going to have an energy shortfall and the energy that we do have will be very expensive.
We live in a world designed for cheap energy inputs and energy is no longer cheap. We are already transferring hundreds of billions of Dollars a year to oil producing nations with no end in sight. America is going broke. American citizens will be feeling the pain of this fact for a long time to come, perhaps from now on as the American standard of living drops as expensive energy pricing takes its toll.
Byron King writing for The Daily Reckoning picks up this point…
“The returns are coming in from the distant precincts of the oil patch, and the winner is… Oil!
“The price for oil has barely budged based on the Saudi Summit. There has been no summer sell-off, and I’d be surprised to see a significant pullback as the summer driving season kicks into gear. (Followed by hurricane season, and then the buildup for winter heating stocks, followed by winter.)
“What’s going on? Well, what the Saudis give – in proposed, future increased production…the Nigerians take away – with ongoing oil patch carnage that forces the likes of Shell and Chevron to close vast pipeline systems. Apparently the present trumps the future, even in the futures markets. Everything is connected to everything else, isn’t it?
“Here is my take on the exit polls from the Saudi Summit…
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