World Economics and the Oil Price and The Roman Empire

I feel some strange thing is happening to the world of late. Things that wouldn’t have happened maybe 10 years or even 5 years ago are popping up all the time. We would have never thought that the USA would have been floundering about during a disaster, it is normally the USA that is the world achiever in supplying what the world’s disasters need. They seem to be more prone to being ignored and criticised when they make decisions. I am feeling that the USA is losing it superpower status compared to what it used to be. Does the USA need a cold war and a cold war enemy to be thriving. Perhaps the economics of what they have been trying to do for the last 30 or 40 years is finally catching up with the realities of economic life. Is it facing the same reality check that Russia has been struggling with the last 10 years. Don’t get me wrong, after working there for almost 3 years I fell in love with the country and the people. But there is something in the air that isn’t quite right about what is going on with the USA today. The energy crisis that is going to hit home pretty soon is going to be the biggest test of reality for the country. We have to someday face the fact that oil is not infinite and will start to run out, maybe in 50 years maybe in 100 but the supply will become a political and world changing fact. It is obvious that China is now becoming the worlds powerhouse and without a doubt can make everything the world needs and at a fraction of what it takes in any other industrialised world. But they cannot let every Chinaman have a car and a Harley and AC and 3 computers. It would drain the oil from the planet very quickly. The time will come very soon when oil is a very expensive commodity and if you think $70 a barrel is expensive think about $700 a barrel, does this sound silly or stuff of dreams I really don’t think so. How much would each of you who read this pay for a gallon of gasoline, I would pay virtually anything to be able to drive my car where I want, maybe $20 a gallon or $40, perhaps 20 times what it is today, how many of you would know how to live without a car, in the USA it would be an impossibility. In Europe it is possible the distances are much smaller and we do it everyday in our very busy small countries. China does do it, the amount of cars is miniscule compared to the rest of the world and they still make everything the world needs. So which country do you think will suffer the most if gasoline does go to $40 a gallon, quite obviously the USA, it would take a dump of catastrophic proportions if oil went to $700 a barrel, but how silly does that really sound. When you have the auction type market for oil that we have right now it only takes a small change in supply for the price to jump $5 or $10 a barrel. Demand for oil is increasing and supply is basically stuck at the maximum it is possible right now, so it will not be long for all those young folks who want a car to keep pushing demand passed the supply and then you are into a richest person buys auction, this is where we can see some nasty things happening to the world economy. You suck all the money out of non oil producing countries and see what happens to world economics. It starts not behaving like predicted by all our fancy economic books. We are living in an age of the Oil empire and eventually it is going to start running out, I think we have a gap of maybe 10 years before the really bad stuff starts happening and where money start looking like nothing but ink coloured paper. I don’t think there are many people who can remember the economic crash of the 1920’s and the reasons behind it but it doesn’t take much rocking of the worlds paper based money banking system to shake it all apart. The Roman Empire was a huge and fantastic thing that lasted the best part of a 1000 years and it eventually fell apart from people who had no respect of their laws and basic theories of life. What would it take to have a collapse of life in our world, $700 a barrel perhaps and all your money in the bank being turned worthless overnight. How would anyone cope with a letter saying “ Dear my Jones”, due to circumstance out of our control, your $2 million is now gone and you’re a penniless Joe or Joelene, how could you survive that , many people in Germany had that letter during the 20’s and that led us to the second world war. So if you follow my argument to the ultimate point, if we have a rise in oil prices that are governed by our market driven economy then we could have a breakdown of law and order as in New Orleans but on a world scale. Who would invade who then and what would you take from your neighbour. Perhaps its being a bit pessimistic and long term but someday we are going to have to face the fact that oil is going to be so horribly expensive that only the rich will be able to afford the prices and we will be back on two feet or two wheels or riding along on horses, now wouldn’t that be a peaceful world to live in, unless your invading France to get your wine for free.