No matter how you modify it – call it light and sweet, or even crude – oil remains a problem that we just can’t seem to shake.
That became painfully clear today, as an historic benchmark was reached, when oil reached $100 a barrel. Although most market watchers thought was inevitable, it was still a shock to the system. The Dow ended up shedding 1.7% on the day, a fairly heady drop for the first day of trading in a new year, and was accompanied by the usual sturm and drang from broadcasters – Mexican weather, Nigerian inventories, assassinations – oh my! Oil settled at $99.62.
There are, of course, other things to worry about than just oil: The nasty credit crunch/ housing market, a weak dollar, and global unrest clearly among them. But bottom line, we’re all paying about 60% this year than we did last year for a product which is just as essential to our daily lives as it ever was.
I’m not picking on the marketplace, really. I turned my self into a financial writer by night while toiling at a brokerage firm by day, and I was a daily market reporter for a lot of years, mostly through the 1.0 bubble and beyond. And even though I preached moderation, and often made fun of the sports-like glitz of most market commentary, I really do understand the adrenaline charged atmosphere of rapidly moving markets. And I know how real world events – like assassinations – can make people very nervous. We really are connected to each other by these events, and ripple effects can be profound. But watching the oil drama unfold today, I felt more sad than nervous.
Thirty years after the oil shocks of the 1970s, which should have established the beginning of the end for the cheap, reliable oil sources, we have yet to have a viable energy alternative for a global economy that remains soaked in oil. I have to believe that this is not an innovation issue, but a leadership/political one. There have been so many lost opportunities – tax incentives, for example – but the one that always leaps to my mind was one of Ronald Reagan’s first great acts: Removing the solar panels on the White House roof which had been installed by the previous occupant, Jimmy Carter. The ’90s were no better. One of the less obvious failures of the deelpy “distracted” Clinton administration, was their inability to address our crumbling infrastructure or affect our energy independence. It’s a legacy we live with today.
(BTW, thanks largely to the Park Service, some solar energy has been restored to the White House grounds.)
There is a new call for innovation on green tech coming from Silicon Valley, and perhaps concerns about global warming will actually fuel some interesting breakthroughs. But without true leadership and political sophistication at the highest levels, it’s hard to imagine the global economy being powered by anything but oil and the hot air of market watchers everywhere.