Oil prices: a conspiracy in our favor?

First off, if you haven’t already, I suggest you read this, with which I am in absolute agreement.  All kinds of emerging technology is becoming competitive due to oil’s continuing rise on the market in dollars, and the unremarked story is that the U.S. really is adjusting to increased oil costs much better than previously anticipated.  I remember absolute horror predictions made (by static analysis, of course) for what would happen when oil was a consistent 60-70/barrel.

Oil’s pushing towards $100/barrel, with no end in sight.  Yes, some of that increase, in fact, a lot of it, is driven by “sort things out with gunfire” politics in the middle east, and both major political parties are tied at the hilt to it.  But not all of it is so transient.  U.S. stocks are low, too, and likely to stay that way for a while.  Remember that a little further down…

But the other side of this… while this fuels our move away from automotive gasoline, what’s driving it?  Well, at least partially, that’d have to be the incredibly weak dollar.  That was against the Euro, and by the time folks are reading this, it may be over the 1.5/dollar mark.  That’s bad news for me personally (it means that visiting my in-laws is completely off the table financially), but as a whole, this is a global good thing.  Greenspan’s monetary inflation is destroying the petrodollar, at precisely the same time that the U.S. needs to:

  1. manufacture more at home
  2. get away from the “petro” anyway (or at least the incredibly wasteful gasoline part)

Huzzah!

What this means is that not only is oil greatly increasing in value, but the petro producers aren’t currently getting much additional value for it.  Does that simply mean they’ll swap out into trading oil on the euro internationally?  They could… but that wouldn’t affect U.S. prices much at all (they’d still go up), and, more importantly, it wouldn’t pay back the costs of doing so, since currently they can buy up huge stocks of oil on the cheap.

Eventually that’ll mean a glut, and oil prices will drop… relative to an increasingly weak dollar.  Meaning producing countries will get:

  1. Not much profit now:  prices are jumping, but to less real profit per dollar earned (since the dollar is worth less and less anywhere else in the world).
  2. The U.S. Congress having all the “air cover” in the world to back any other pony due to domestic oil-price headlines.
  3. An eventual oil glut’
  4. Right before the U.S. goes hybrid/supercapacitor/bio-diesel, etcetera… while cooperating closely with India on perfectly clean thorium reactors.
  5. And then sits more-or-less energy-independent with a currency encouraging domestic manufacturing.

If you wanted a single recipe to completely screw over the PetroTyrants (the House of Saud, Putin, Chavez, Iran, etc.), you couldn’t come up with a more effective recipe.  Not to mention that the next possible up-and-comer, China, has a little Straits of Malacca problem we won’t be suffering from.  (Sorry guys, but securing the Panama Canal didn’t do it: we have airplanes now.)

Makes you wonder: are there some adults in D.C. actually thinking this long-term?  Or is this “happy accident” territory, and we really are better off being lucky than good?

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