Barreling Toward Disaster

The Washington Post has a front page story about how the Bush administration has encouraged the energy industry to loot public lands, regardless of the impact on the environment.  Even Westerners who used to support the energy industry are appalled.  

So, has it helped?  No.  This article from Bloomberg has some sobering information, hidden in the dry financial language.  

Diaries :: randym77’s diary ::

Bush has resisted opening up the Strategic Oil Reserve – until this week.  Because of the hurricanes (not to mention the looming election), he finally caved this week, announcing that 1.4 million barrels would be released.  But oil prices didn’t drop.  Instead, they closed at $48.88, a record high.  Traders felt that 1.4 million barrels wasn’t nearly enough.  

Even worse was this part:

U.S. crude-oil stockpiles fell 9.1 million barrels to 269.5 million in the week ended Sept. 17, the Energy Department said. Inventories are 5.8 million barrels from being the lowest since September 1975. It was the first time since 1988 that supplies had dropped for eight straight weeks. Refineries ran at 88.1 percent of capacity last week, a 7.6 percentage point decline.

Inventory is falling at a time that it should be growing.  And even the financial types are starting to realize we could be in trouble:  

“It looks like we’re entering a phase that will take the price to unbelievable highs,” said Chuck Hackett, a broker and analyst at Access Futures & Options Trading, a commodity futures brokerage in Woodlake, California.

This week, the stock market gave back months’ worth of gains in only a few days – at least partly for fear of high oil prices.  Consumers will pay hundreds of dollars more for home heating oil this winter, and more and more of their budgets have been going toward gasoline.  That’s a stiff headwind for the economy at best, and perhaps even a harbinger of impending recession.

George W. Bush, oilman that he is, has done everything in his power to help the energy industry.  (Including, according to some, declare war on a country that was no threat to us – but did happen to have the world’s second-largest oil reserves.)  He’s trashed environmental regulations, given cushy tax breaks to oil companies, and gotten his Saudi pals to promise lower oil prices by the election.  So why are oil prices higher than ever?  None other than the Wall Street Journal is suggesting that “peak oil” may be upon us.  

Whether or not Hubbert’s Peak has arrived, we are clearly going to be facing very high energy costs.  Combined with the exploding debt and the real estate bubble (or at least the refinancing bubble), there may be an economic maelstrom awaiting the new President Kerry when he takes office next year.