Perfect Storm Coming: And it's Got Nothing to do With Hurricanes
Worsening economy and weak dollar, combined with escalating energy costs driving inflation, will all merge this Fall; just in time for the November elections.
It's just about that time again. No, I'm not talking about hurricane season, but I could be. As Bertha strengthened into the first hurricane of the 2008 Atlantic season earlier this week, the timing of that event could just as easily be a fitting metaphor for what is to come later this Fall. As the November elections inch closer, the waves of bad economic news just keep on coming. At the heart of those problems is the worsening energy situation here in the United States. In Washington, career politicians who have thus far been willing to sit on their hands in the face of a rudderless national energy policy may well find themselves out of office if current trends continue.
You wouldn't think it could get much worse out there, but with the possibility of $5.00 per gallon regular unleaded gasoline just around the corner, still more of your hard-earned money is about to leave the country. When and if the average price reaches that threshold, I'm predicting wholesale taxpayer outrage, from coast-to-coast. Already, a significant majority of Americans want to commence drilling off the coasts and in ANWR, but this is unlikely to happen any time soon, given the current cast of players in Washington. And, neither of the two presumptive presidential nominees is very likely to move that along any faster.
By the time November 4th rolls around, the war in Iraq – long thought to be the central theme in this election – will have quietly faded into a distant second place. Foremost on the minds of most Americans will be the sorry state of the economy, driven by the price of energy, the spiraling trade deficit fed by crude oil imports, the weak dollar and, I suppose, a hundred other things. I hope that I am wrong, but it sure isn't looking like it.
There are some bright spots out there. Up in Alaska, Governor Sarah Palin is still trying to liberate billions of cubic feet of stranded gas from the North Slope. And although she's not getting much help from the oil majors (even as Exxon lines its pockets in the wake of the recent Supreme Court ruling on the EXXON VALDEZ damages), I wouldn't bet against her getting the job done. I still say that a land route through Canada is a mistake when a spur line to Valdez would keep Americans in control American natural resources and also give us more reasons to build additional Jones Act LNG tonnage The sooner we get started on moving the gas to market – any market – the better. And that project will create thousands of jobs, tax revenue and a much needed kick in the pants for a sputtering economy. Maybe we can even send some gas down to those brand new, empty and idle Gulf Coast terminals.
American oil and gas isn't going to alleviate all of the problems of an economy that is deeply dependent on imported oil, but starting down the road to producing more energy at home will, as a minimum, serve notice that we have the intestinal fortitude to do something about the problem. It also jumpstarts the economy, keeps more U.S. dollars at home and for those of you in the maritime world, it's just plain old good business. Sure, we need to wean ourselves from petroleum, but that event is probably decades away. In the meantime, we can either go bankrupt buying it from the likes of Hugo Chavez or our close friends in Nigeria, or we can do something about it here at home.
November's perfect storm is already percolating from the heat of July and August. When it arrives, American lawmakers – and the folks that put them in office – are going to be faced with difficult choices. In the past, the failure to act on a cogent national energy policy ranked somewhere in the evening news just behind the annual failure of the Cubs to win the World Series. Neither eventuality surprised anyone, but it also didn't seem to matter very much, either.
This year, like it or not, a focused energy policy that includes – at least in the short term – domestic drilling, is an absolute necessity. And, I think Americans will not tolerate anything less. Failing that, a real hurricane will seem like a brief cloudburst in comparison to what comes next. – MarEx
Joseph Keefe is the Managing Editor of THE MARITIME EXECUTIVE. He can be reached with comments on this or any other article in this e-newsletter at [email protected].
NEXT WEEK: Massachusetts legislators vote to move Boston Harbor to Long Island Sound. Stay tuned!
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