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By: Ish Theilheimer, Publisher
I'm glad that Canada's economy is doing well. It's too bad it took so long to get things on track after disastrous federal decisions in the early 90s that crippled our economy, including free trade, high interest rates, cuts to health care and other social benefits.
But I'm glad things are back on track. And it's good unemployment is down to three percent higher here than in the US. All through the 1990s we had four percent more unemployment, so this is progress. Of course the streets of Pembroke and Timmins and Vernon and plenty of other small Canadian cities are still lined with boarded-up store windows. But things are rebounding. For a moment.
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The world price of crude is edging up toward the price of Coke. Let's trade Coke for oil, switch to PC Cola, and pocket the change. |
The bank economists and other experts have been predicting smooth sailing, an endless economic boom. So why are stock markets so skittish, bouncing up and down between spates of profit-taking and bullishness.
Could it be the price of oil? As the world price of crude edges up toward the price of Coca-Cola, strange things can happen to an economy.
Last week, I featured a charming little website called www.dieoff.org in one of my highlights. It makes the case that oil production will peak at some point in the next few decades, at a point when the world is industrializing and population is growing faster than ever before in history.
Let's keep it simple. Here's what everyone knows:
Oil consumption is growing. Supply will not increase and eventually will decline. Production of all material goods and services, including and especially food, almost completely depends on the availability of cheap oil.
Houston, we have a problem. If the price of oil continues to climb, the endless boom will grind to a halt.
The smart money says oil prices will come down in a kind of "soft landing" brokered by oil-producing nations aware of the harmful potential of sky-high oil prices. (For an insider view of the discussions around oil prices, see: www.stratfor.com/MEAF/specialreports/special34.htm.)
This is from StatFor, an American news analysis website run by former intelligence, military, and corporate exec types. They write that "attitudes are beginning to shift among oil producing nations, and many are beginning to consider increasing production that would, in turn, affect the price.
"Given the economic danger of high oil prices and the continued difficulty of maintaining a cartel, we expect that the March 27 OPEC summit will result in a moderate production increase. This will lead to a price decrease and encourage future cartels."
But even if it levels off, it won't go down to former levels. So what happens then to the truckers, the farmers, the factories, the power plants, and ultimately the consumer? I'm no MBA, but I can't see why the economy wouldn't slow down if everyone's costs go up and consumer purchases slow down.
Straight Goods says: hoard your four-banger and dump the SUV now.
Straight Goods suggests: Let's try to get the oil-producing nations to accept Coke for oil, since both cost about the same thing, switch to PC Cola, and pocket the change. Then, we can try to get the world to sing in perfect harmony.
For real: We are addicted to oil. We know what our addiction costs: Wars and pollution, past, present and future. Famine in the future. We've known what needs to be done for a long time - conserve energy and reduce our reliance on oil.
Some parts of Europe are far ahead of us in all of this, simply because oil is more expensive there. Maybe a good old 70s-style oil shock is just what we need to get everyone to do the right thing. But does it have to be this way?
Or, to paraphrase environmental advocate Ralph Torrie, "Why does it have to make business sense to save the planet but not to destroy it?"
For two alternative visions of our energy future, please see this week's animated cartoon by Straight Goods' house cartoonist Jim Kempkes.
- Ish Theilheimer
February 21, 2000
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