Thursday, January 17, 2008

The U.S. population topped 303 million this month.

Industry has substituted natural gas, nuclear, and coal fired electricity for oil to the extent possible.

The only efficiencies left to be rung out of the system:

More efficient cars. This will have moderate impact in the short term as the installed rolling stock of vehicles cannot be replaced fast enough (to prevent);

Less total miles driven. On average each American motorist will drive fewer miles each year from this point forward. Pretty simple really. There are more Americans accessing declining oil imports and domestic production. No amount of economic stimulus, monetary or fiscal, will negate the (work and kinetic energy) laws of physics.

It is not likely possible for inflation adjusted non-internet retail sales to come back in this environment, for example. If the consumer is 2/3 of the U.S. economy, and the consumer is experiencing: declining access to credit, increasing energy and food costs, and has ZERO savings, and is now constricted in his/her transportation opportunities, how does the U.S. economy come again to experience real economic growth? Corporate spending you say? The effects of declining transportation fuels will hot corporate America at least as hard as consumer America, but more on that in a future post.

A good friend of mine likes to say that driving around in circles does not increase GDP. Maybe. But less circle driving is certainly bad news for the auto industry, the fast food industry, retailers, rubber and glass producers, lawyers for drunk drivers, etc...

If the U.S. has seen peak oil imports, then the U.S. will see peak (real) economic growth soon, if it is not past tense (I say "soon" because there are still great efficiencies to be rung out of our wasteful use of electricity - I would not be long Utilities). If this is true, and it is very, very possible, we can expect tough times for Wall Street and Banking to be a permanent condition. This is not to say that we will not have vicious rallies in the markets. We will. Nor that hyper inflation could not drive the market up in NOMINAL terms. It could.

Still, your wallet will not be fooled.


Yours for a better world,

mentatt (at) yahoo (d0t) com

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