News From Around the World
Monday, April 09, 2012
There’s a shift emerging in the worldwide race for the ''what’s left portion'' of the world’s energy supply. Can America find the political will to harness its technology and vast energy reserves to get it growing again?
At the beginning of the industrial revolution, major US oil companies – Standard Oil and later, Chevron, Esso, Mobil, and Texaco - got their start in the oil fields of Pennsylvania and East Texas. That oil rush has lasted for almost a century and has been the single most important factor attributable to economic growth in the modern age. Without oil, hardly a modern convenience today would be possible.
But when the major oil companies all but abandoned the U.S. in mid-century for cheaper-to-recover oil in foreign lands of the Middle East, Africa and Latin America, it left behind the not-so-easy-to-recover balance of America’s oil and gas trapped in vast shale deposits here at home.
It was oil, and U.S. dollars, that created nations from thin air in sandy deserts and jungles all over the world. It made modern life possible.
As societies become richer and more powerful they, like every other modern society, have the time and money to focus on societal needs; like environmentalism and regulations to concentrate their wealth -- to protect it. Thus, they administrate. They socialize. They create more rules to govern. They become affluent and sophisticated and elite.
That same principle of economics 101 has affected America in some interesting ways. When the major oil companies left America they also left behind an important economic engine that fundamentally changed our economy.
That change is evident in the 2010 Census.
Since late forties, the landscape of the American workforce, without big oil production, was transformed from manufacturing, agriculture and retail as the industries that employed the bulk of Americans, to a new society were the majority of employees now work in healthcare, social assistance, administrative and waste management. Yes, waste management.
Cheap and plentiful oil deposits and third-world governmental acceptance of this new found liquification of their trapped natural resources created the economic engine to fuel new cheap labor markets that now compete with America.
China, Indonesia, Southeast Asia and South America now control and create those jobs while American ingenuity hands out direct financial assistance to over 20% of its population who, in turn, create no wealth while another 49% do not pay taxes to support their disproportionate share of consumed social services.
Oil has shifted the balance of world power to a handful of countries and will further shift this power (away from “global power”) to form new regional powers as the need for super-power wanes.
Flush with oil and oil trade associated dollars these regionals are now less influenced by global power, and more interested in regional alliances where cultural influences make economic cooperation more productive.
Take Taiwan. Long known as a political foe of its dominate claimant, mainland China, Taiwan is now wishing to convince China to allow its 80,000 businesses to trade directly in the Chinese Yuan (unbelievable five years ago) – thereby avoiding the cost of first converting their contracts into Dollars via Hong Kong’s financial markets. This strengthens the Yuan and weakens the Dollar long-term.
Taiwan is not alone. Most of the world's financial centers, including London, Singapore and Hong Kong, all want to be offshore hubs for the Chinese currency to avoid the costs associated with first trading in Dollars.
Washington has been silent on this matter, preferring a slow defacement of our currency in order to help offset a growing debt crisis it cannot solve politically at home. Remember dear readers, that defacing of the dollar creates inflation and is slowly destroying your wealth.
Simultaneously, stiff environmental regulation and taxes discourage the opening of new oil fields at home capable of creating new wealth.
Sooner or later, Canada and the US will eventually emerge as the "Saudi Arabia" of the 21st century. If not for the extremist policies of environmental protectionists, including the current government who stands in the way of intensified drilling, landowners to local governments would be back to work putting this newfound wealth to work creating new jobs and communities in America.
America has the resources to re-shift its power and policy to re-fuel America at home. The price of American energy is the cheapest in the world (a 5x advantage by world standards in natural gas).
After all, the world is less interested in our American power and influence abroad. We’d be advised to listen and get on with a productive use of our time and energy.
America can bring Big Oil home.
Can America find the political will to harness its technology and vast energy reserves to get it growing again? Or, will we be left behind?
For now, it all boils down to the next election cycle.
About Ed DeShields
Last week: A Theory of (Your) Identity
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