As I craft this post the Standard and Poor 500. Index is 4300. West Texas crude is $103.81.
A quick scan of the following graphs tracing exponential % rise in the price of gas and oil leave little doubt— and the cost of oil is not sustainable and if the trend continues the market will crash with all the ramifications that, that event will precipitate.
Thanks to stock chart.com. Free Stock Charts- $WTIC | SharpChart | StockCharts.com
So how did we get here? Can we prevent this disaster?
The answer to the latter question is yes– provided the directing minds implement the actions set out below.
How did we get here? The situation is a self-inflicted wound. While many might disagree it was precipitated by what some might seem to be a childish response to Trump’s American self-sufficiency energy policy. Reluctantly but firmly I have adopted this perspective. Within four days of taking power and through executive orders the self-sufficiency of American energy initiatives was reversed.
Keystone pipeline- stopped. Fracking- regulations- stopped. Oil and gas drilling- regulations- stopped.
These actions were exacerbated and Progressive Democrats’ socialist ideology and those of like minds who convinced Pres. Biden to championing a green new deal by 2030. One initiative for example –America– all fossil fuel cars were to be off the highway. In Europe nuclear power plants –close. A long list of other regulations impeding self-sufficiency in which fossil fuels played a major part. Only green energy initiatives need to apply.
Most of us applaud sustainability and are supporters of environmental initiatives but the transition to these initiatives requires a certain amount of common sense.
One of the high profile advocates of the demise of Trump’s self-sufficiency energy policy was a young woman who chastised those of different mindsets with the biting words—“how dare you”.
Today I respond to her and others of the hard left… “How dare you”. Your ‘cult-like’ pressure has resulted in Europe being dependent on 40% of their gas and 25% of their oil from Russia. Clearly a critical bargaining chip and empowering for Pres. Putin.
In America, this complete reversal of Trump’s self-sufficiency policymaking America a net exporter resulted in Biden’s America importing 600,000 barrels from Russian daily. America pays these extraordinary energy prices — In effect —Americans are funding the Ukraine war.
Yes… ‘How dare you’ ‘indeed…
So is this pending market crash preventable?
I contend the following initiatives might be the best way to start. Time is of the essence.
- Immediately without further dithering reinstate Trump’s energy policies.
- Immediately without further dithering implement ‘, the selected’ banking sanctions to now include all Russian oil companies’ banking arrangements. Watch for the emergence/adoption by Russia /oil companies of cryptocurrencies as a substitute.
- Immediately without further dithering undertake proactive steps to enable all nations to close their contracts for Russian energy. In many ways, Russia can be viewed as a gas station — and if the product is removed — the nation’s economic power becomes a nonissue.
- Immediately without further dithering support nuclear power initiatives.
- Immediately without further dithering develop alternative energy sources. Germany is to be commended. During the last day or so Germany agreed to connect Ukraine to their electrical grid. They’ve announced the commencement of two new LNG plants, and Nuclear power plants are back on the table.
- Immediately without further dithering review all green energy projects and apply common sense going forward and cease the cult attitude in the selection process.
The adoption of these initiatives will cause significant disruptions. For example if successful in cutting off the cash flow for Russian oil— the demand-supply curve shifts and the cost of oil will rise significantly– this should be offset by opening up the Keystone pipeline, removing impediments to fracking. Offshore drilling. Coal etc. to mitigate the economic impact.
The impact on the global economy and Canada in particular as it is heavy economically interdependent on America may find the Bank of Canada’s now reluctant to implement interest rates increases as Canada’s inflation and economic downturn would be exacerbated by such increases to the cost of business. Such an event.
Share your thoughts– no right or wrong answers—am I going too far?
A further thought.. carbon tax .. another stick on the fire…
I agree with everything you suggest to fix the problem and no you have not gone too far in fact not far enough. You suggested a cure but you did not kill the disease. In reality, none of your suggestions will happen as long as the current administration and powerful machine that is running remains in power. With no further dithering, we need to get rid of them.
Agreed.. needs to be reset with new mental models that align with the Constitution.. ‘change going to come’.. Sam cook.. thanks for checking in. T
Beware the ides of March or the 16th a 25 % drop would be a blessing more like 50 to 80 % would be more likely the reset is going to happen put some cash in a bean can.
Interesting–I heard several financial commentators today suggesting the possibility of numbers like you suggest… Seems harsh–they also suggested Oil
at $200 a barrel… This additional cost wouyd directly impact productivity and a significant factor in trying to control Canada’s inflation.
For example the airline industry.. fuel is 25% of their costs … Going from 40 dollars a barrel a number months ago $200 a barrel been quite an additional cost.. as they tend to run skinny on the margins…I expect most airlines are buying future contracts and options to guarantee prices today for a few delivery months from now.. Not a bad idea for all of us…
Good thoughts…LP,, thank you.. No wrong or right answers ….Others might have other thoughts… Best terry