A Return from Hiatus

After months of hiatus, I am back! With the US economy in what seems to be such turmoil as markets continue roller coasting, oil prices surging, gas prices skyrocketing, hurricanes devastating, home prices leaping, mortgage rates dipping, pump owners gouging, jobless claims rising, hedge funds failing, and a number of other factors converging…how could I possibly stay away any longer.

All around us it seems the economic picture is becoming more and more bleak. The explosive growth of China has caused a shift in the demand curve for crude oil, which has dramatically altered the energy picture in the United States. During the 20th century, commonly referred to as the American Century, Americans enjoyed low oil prices as they themselves were the primary consumer of oil and gasoline products. However, as technology has increased rapidly and former developing nations have become ever more developed, the demand for this limited supply of crude oil has risen exponentially. And unfortunately, as demand rises, unless the supply curve shifts also, then the only way for a market to achieve equilibrium is by price changes, and in our case that means higher pump prices.

The prick about the whole thing is that it still only costs oil producers $4 US dollars to produce a barrel of oil; however, they are now selling it for around $70 a barrel.

On the other hand, the one positive thing about higher oil prices is that most experts believe that at $3 a gallon gasoline, it becomes vastly more viable for companies to pursue alternative energy sources, which ultimately mean lower energy costs for the consumer, and cleaner alternatives to oil.

In short…praise the day that fuel cell technology finally matches the technology of our current gasoline powered engines. Then we can say “Sayonara” to mid-east oil, and look forward to an ever cleaner environment.