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We are off the cliff so what to do with the pusher?
Read more about: Economy, Energy
Photo owned by maveric2003 (cc)What caused the latest world economic crisis? Toxic Credit products? Sub-Prime Mortgages, Galway races tent, ninja morgages, Massive bonuses to executives? No none of these were the cause of the latest crisis they were simply the cliffs we were pushed off. But they were not the push that sent us over the edge. No the cause of the crisis was Richard Arens. So who is Richard Arens?
Back in January Richard Arens became the first guy to buy oil over 100 dollars a barrel. In July oil hit $147 dollars a barrel. If we look back over the progression of the credit crisis we see that it got serious around that time. Oil caused a decrease in economic growth in America, this meant that large jobs cuts were feared. This then fed into fears that sub-prime mortgages might in fact not be very stable. Then people looked closely at the state of the banks and found that they were in fact all inescense fucked.
So since then all the talk of political talking heads has been about the need to cleanse the system of all the finaciall problems. Offereing massive bailouts, nationalisation and guarantees. But little has been talked about what pushed this all off.
Now the sub-prime mortgage problems have been around since before Richard Arens did his $100 oil deal but the economic effects of increasing price of oil have brought the edifice down. This really shows the world how vulnerable we are to energy prices.
So what can the Irish government do to solve this? Well first off probably not a lot. This crisis started in America and what ever we did we probably would be in trouble anyway countries without our massive construction boom are also bailing out banks but the amount of exposure we could of have is off course debatable.
Once the financial systems are “cleansed” and after a few years we will again return to normality. That of course depends on energy. For an economy to boom one of the required items is cheap and readily available energy. And although oil is slipped at the moment to around $90 it is unlikely to stay that low in the event of a new boom. Especially since Brazil, China and India are joining the party. So that means that to rejuvenate the economy we need to be looking at the energy solution.
Our first boom had much to do with our low taxation making Ireland a good cheap place to do business. However now that is no longer the case, other countries are cheaper and just as good as us. So we need to make ourselves cheap in another fashion and in a world of high energy prices. There is clearly one way to do that. And that is cheap energy.
To do this we need to look at Nuclear energy and renewable energy and we need to start now. Alas I think talk of corporate salaries and ninja mortgages will dominate for the foreseeable future.
re. Oil Prices and Energy.
It is now time to refine the way we think about energy. Nuclear power can produce electricity, but does not directly help produce energy for transport (excluding nuclear powered naval vessels). So we need to separate the types of energy we use and how we use them - ie what services we actaully get from the various fuels we use to produce what we call energy. Light, heat, power do and can have different sources. In this way, we could start to reduce the impact of oil prices on other forms of services we get from energy. An example is generating electricity from natural resources which we have in abundance eg. wind, wave, tidal. What percentage of our total annual energy expenditure in Ireland is being spent on creating options for getting energy services? This future-oriented expenditure is a mixture of what is usually known as R&D, but could also be extended to major re-orientation of other expenditures eg. the introduction of net-metering, investment in grid to take power from where the wind resource is as was done with say the hydro and turf generation stations in addition to Moneypoint. Moneypoint, in common with oil-burning stations, was sited where the fuel could be imported. But Moneypoint was only connected to Dublin.
Sorry Simon, but that’s just wrong. All of it. It’s a classic example of reading history backwards and reading too much into coincidences. In reality, the entire global debt system has been incompetent for a number of years and has kept digging itself deeper and deeper into a massive hole, taking the real economy down with it. It was never just a US issue. It was never just a subprime mortgage issue. It was never related to oil prices.
Energy is frankly irrelevant. I don’t like being so blunt, but I’ve seen a lot of bad journalism throughout this crisis and feel I have to jump on this piece.
Pyramid schemes collapse under their own weight. At the most, the price of oil may possibly have been the straw that broke the camel’s back, but it was not a cause.
But finally you should look at the dates. The very story you linked to pointed out that the oil price hit $100 in January 2008. By January 2008, the upcoming depression was really old news. If it had been January 2007, you might have found your straw. But Jan 2008 is putting the effect after the cause.
Sorry again, and good night all!