Oil and Food Prices are high because World Oil Production Peaked in 2005 and has declined 2% since then*. World Oil Production will decrease another 10% by 2020 and an additional 20% by 2030*. The fall accelerates after 2030. Oil prices will rise further to control demand.
Food prices are linked to oil prices because food production requires petroleum-based pesticide, herbicide, fertilizer, and fuel. As oil prices rise, food prices necessarily must rise.
If we do nothing, unemployment will rise further, tax revenue will fall, governments will shrink, and starvation may set in, and the Poor may revolt a-la Egypt. Furthermore, the increased unemployment will increase poverty and may inspire people to have fewer children. These smaller families will reduce the demand for housing, thereby further shrinking home prices and home-builder jobs. Some home prices will fall below the mortgage values. Some homeowners will default, and some banks will go bankrupt. As poverty increases, fewer people will buy new cars, and gasoline car companies may go bankrupt. All these trends have already emerged. Unfortunately, they will intensify over the next two decades.
The real economy will shrink further whether we inflate the currency or not. Whether we call this recession a ‘double-dip’, the ‘Relentless, Remorseless Recession’, a ‘Depression’, or the “Greatest Depression Ever’, it will last for decades. It may kill off 5 billion people as the world economy downsizes to a pre-fossil-fuel era i.e. 1800. In 1800, virtually no oil, gas, and coal was used, and the world economy could support 600 million people.
Federal Reserve Chairman, Dr. Ben Bernanke, cannot solve this shrinking oil, shrinking real economy by printing more money via Quantitative Easing or any other method. President Obama cannot solve this problem by spending more federal dollars to build more highways and bridges. The Republicans cannot solve this problem by reducing tax rates and cutting regulations. Only you can solve this problem.
How? If you stop buying gasoline, demand for gasoline will fall. If demand falls, gasoline prices will fall. If gasoline prices fall, people will have more money left over to buy the products that you make. You will make more money and become richer.
How can you stop buying gasoline or at least reduce purchases? Drive less. Move closer to work. Consolidate your shopping trips. Vacation closer to home. Stay home more. Drive a more fuel-efficient car! Buy and Drive an Electric Car! Nissan Leaf, Chevy Volt, Ford Focus Electric! Buy and use an electric lawnmower!
Buying an electric car will ‘make you richer’. How so? The total cost of ownership for a gasoline car over its 20-year life is the $20,000 purchase price plus $500/year maintenance and $6,000/year fuel times 20 years = $150,000. The total cost of ownership of an electric car over its 20-year life is the $30,000 purchase price plus $100/year maintenance and $300/year electricity times 20 years = $38,000. You become $112,000 richer by buying and using an electric car.
Other ways to reduce oil demand are less obvious. Take the train rather than the airplane for a 90% oil savings. Eat beans for protein rather than meat. One pound of chicken require 2 lbs of grain to reach maturity. One pound of pork requires 4 lbs of grain, and one pound of beef requires 8 lbs of grain. Eat the more efficient animals when you do eat meat. Shop the farmers’ market and avoid imported food to reduce shipping fuel costs.
I am sorry this story is neither pleasant, simple, nor obvious. Think about it, (maybe do some research), and decide for yourself whether it is true. I am a humanitarian, and I want to preserve the population, wealth, and lifestyle we have. I wish we could continue the real economic growth like we had when Oil production was growing (from 1860 to 2005). However, only you can make that happen by stop buying oil.
* “When Oil Peaked”, Dr. Kenneth Deffeyes. Random House c 2010. (Amazon.com)
* “Crude Awakening”, Ray McCormack & Basil Gelpke. Video DVD c 2007. (Amazon.com)
* U.S. Congressman Dr. Roscoe Bartlett (R Maryland) “Peak Oil Testimony” 2005