OIL and the Future

The graph depicts oil prices over the past few years. It can be found on the oil drum site. Oil is the nominal outward cause of the derivative crash; as prices spiralled, people found energy, transport and food costs growing. These limited disposable income and led to defaults, which stopped the banks' overleveraged and dishonestly validated derivatives market from functioning, leading to more defaults and further falls. Government overspending, borrowing hidden in private-finance and bond schemes, and over borrowing in the southern Eurozone combined with the epochal shift of wealth and income back to the high-saving, hard working Indian Ocean countries completed the collapse. You could have read about it all unfolding, and chuckled at my gradually dawning understanding of it all on this blog over the past few years.

Oil, though, is an odd thing. Its price is affected by pipelines, the value of the dollar, and the growing demands of Asian countries, to the point where a sustained growth in energy demand of 1.5% a year seems like a conservative estimate. What strikes me, though, is that oil at cheap prices and in abundance has gone. Getting new supplies is going to take more and more technological investment, and is going to be much more expensive; in addition, the demands on the water needed to pump it out are going to get greater and greater.

Look at that spiral on the graph; almost a helix, as though something serious was evolving. Of course, it is; it is hard to make out, but something like a 2% jump in demand over the past few months has resulted in a near-doubling of prices.

The past decade, in reality, was the decade of misplaced crusades and lost opportunities as unsustainable globalism wound down. The coming one will see higher energy prices, and therefore more expensive international trade. This will punish those who foolishly threw away their own industry and who outsourced everything, like Britain. No surprise there, since the ruling classes here have not cared for ordinary people since the reformation. However, revolutions and revolutionary change occurs when the middle classes get hammered, which is what is about to happen.

What a disaster the reformation was for the world, in retrospect; enclosure, exploitation, empire and war followed almost continuously.

That's past though. A future of more local trade and cost-push inflation that meets with a basically undead banking system, its veins hollowed out by the loss of mortgage derivatives is not going to be a pretty place. It almost makes me hanker for the carbon-markets.

Don't be misled; those carbon markets are an attempt to sustain and develop a market in derivatives that rest upon the moral economy of greenery. If English-speaking people could feel some moral validation in the apparent ownership of a house, and in its appreciation and sale as an asset and security for borrowing, continental Europeans never have. Tell them that they are saving the planet with the sacrifice of extra costs, though, and they may just fall for the carbon-credits that sundry American politicians, regulators and seventies pundits invented years ago. When they do--bang! The last gasp of the west will fuel a last boom, then fade by 2016.

We have to get a grip. Smaller government, lower taxes, balanced budgets, and a decline in personal living standards matched by real democracy are not capable of saving us anymore, alone. Accepting that the good times are gone, that hard and sometimes back-breaking sacrifices are in store, and that the notion of a service and information economy was fuelled by the fumes of cheap oil and globalisation is a matter for individuals. Restoring discipline and education means dumping cherished norms for communities. Upholding the idea of an expansive, rights based welfare and immigration system is going to become an indulgence for polities; the fabric of our lives and our politics and our constitutions is going to change. Very Soon. Our moorings are unfixed.

I've been trying for years in a small way to get that realisation across. I think that the growing numbers of outraged, dispossessed, and depressed people across the Atlantic world are going to start making it soon. I think that even some of those within the bubble will too, but too late. A new synthesis in politics and in the understanding of politics is long overdue.

I urge you to put down the blinkers--all the rubbishy conventional prejudices and opinions that you may define yourself by, whether 'left' or 'right'--and think of how you could survive when things get tough. Hold your families and your prayers and your loved ones close, and good luck.

Oh, and happy Christmas.


Merry Christmas Martin and your points are well taken. We all feel the earth moving underneath us as the old structures that were the foundation of the middle classes are shifting due to actions of the plutocracy and their evil allies. Your point about the Reformation is very salient and as each subsequent generation has moved further from God, the forces of evil and chaos have grown stronger. Given the trends in the first decade of this century, the 21st might be the worst century of all with the powers of darkness on the ascent on all fronts. It is very bewildering when you don't know who are the 'good guys' given the recent actions of the American and British governments. God bless and Happy New Year.
Martin Meenagh said…
Don't despair my friend- Christ has already won.

All the very best to you, and thank you for the comment.

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