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Fueling the Future

News stories on the economy are full of many subjects that would have seemed strange to American readers just a few years ago – European banking, the developing world, clever financial instruments, and so on.  There is one word that is strangely absent, however – “Recovery”.  This once prominent term has apparently been banished from reporting, possibly because no one believes that there is such a thing anymore.

That’s not to say there won’t be a Recovery, but as is typical of a credit-meltdown fueled Depression there has to be a Restructuring first.  Money and labor and all the other resources you can name have to start going into areas that are going to be productive in the new economy that replaces the one that crashed and burned back in 2008.  Barataria has led some discussion on how jobs appear to be shifting rapidly, a sign of Restructuring, but there are some fascinating things happening that show how much our world is changing.

Some of those stories come from the world of oil, the mysterious black gunk that fuels the world.

Gasoline prices have not come down much through the Depression, despite considerably lower consumption driven by better fuel economy.  The reason for this is that refining capacity has always been the limiting factor – the ability to turn oil into lighter gasoline.  Lower demand should have given us some breathing room on our refining limit, but for the first time in 62 years the US has become a net exporter of refined gasoline and diesel fuel.  Developing economies close to us, notably Mexico and Chile, do not have the capacity to make enough fuel for their growing demand.  So they are buying it from us.

The oil being refined is still mostly imported, although the largest source is now  Canada.  But we can make more gasoline than we actually need.  Selling it keeps the price high, and we can expect the price to continue to be above $3 a gallon forever.

If that is not a bizarre enough change in oil consumption, consider the pronouncement from the World Petroleum Congress, an organization sponsored by OPEC.

“Increasing climate effects are an unquestionable reality,” said Sheikh Hamad bin Khalifa Al Thani, the Emir of Qatar. “Developing clean and renewable resources is a goal fully supported by oil and gas exporters.”

That’s right – OPEC is now fully behind renewable energy development, especially in the Middle East.  All the natural gas that was traditionally burned off as a nuisance is being captured and used to produce electricity for starters.  Where it gets interesting is the push by Arabia to generate up to 10% of its electricity with desert sun beating down on solar arrays.  Oil is simply too valuable for them to waste any longer, so they are going to take steps to conserve it and make use of other resources.

As desert people know, green is the color of heaven.

These are just a few stories that highlight the growing demand for more efficient energy and the development of renewable resources.   While we don’t necessarily know exactly what the next economy will look like, we can be certain that reducing energy costs will be a major part of it – and the development of these technologies is likely to be a big growth industry in the early stages of the new economy.  This will produce many stories that might have seemed bizarre just a few years ago.

What we can be sure of is that the economy is changing.  We know that the one which collapsed in 2008 is gone forever, and trying to revive the very same system will not produce what we need.  That’s made life harder for the Obama administration, which has worked hard to pull the levers it can to create jobs primarily in construction and supporting state governments.

It takes a little more imagination, however, to push ahead the Restructuring that will have to take place before a true Recovery can begin.  If you need to stimulate your thinking a bit as to what that could possibly mean, read the news carefully. You’ll find a lot of strange stories just below the headlines.  Taken together, those stories are the surest sign that a Restructuring is finally starting to pick up speed.

17 thoughts on “Fueling the Future

  1. I have never seen anyone else talk about “restructuring”. But you make the case well and it makes sense. This was an interesting blog that went away from the things we usually talk about and it is good but I wonder about other examples. Finance has not changed all that much from what I can tell which leads me to wonder what has to happen there. More on retraining is probably called for too.

    • Anna, I don’t know why no one else talks about Restructuring. It seems damned obvious to me. Instead, we went from “Recovery will happen” to a lot of silence. The pieces of a real Recovery are starting to fall into place but there is no framework to talk about them – and how to encourage this process! It’s maddening to me.
      You are right about retraining, but since we don’t really know what skills will be in demand in a few years it’s hard to emphasize that part of it, IMHO. I’ve been trying to figure out what sectors of the economy are producing jobs right now, but they are a bit mysterious. We do know that big companies and state/local governments have been shedding jobs, but who is creating the new ones that appear to be increasing? Dunno.
      The financial world is a real mess and they simply refuse to reform. As much as I do appreciate the Fed keeping us out of a serious Depression (ie, more like 1929) I do think that the “moral hazard” has proven to be real and the need for reform/Restructuring has not been as obvious to them as it should be. The sense of urgency has also been a casualty of the Fed keeping things on as even a keel as they could, which is the real problem, IMHO. That’s probably why we have yet to really hear about Restructuring.

    • That is a particularly stupid li’l slogan/chant/whatever. It would be good to have a political cycle without stupid sayings, but I think that’s unlikely.

  2. I stood up and took notice at the line:

    “… Oil is simply too valuable for them to waste any longer, so they are going to take steps to conserve it and make use of other resources…”

    Still, it remains NOT IN THE BEST INTERESTS of the Koch Brothers, their ilk and their hired guns, the GOP

    • I think their position is increasingly leaving them isolated. The sight of reasonably priced 40 MPG cars shows that we’re finally getting real, I think.

  3. I think the concept of restructuring has not caught on because no one is used to thinking of things that way. It is interesting that you have not heard the term recovery lately because I don’t think I have either. I was going to look for some articles talking about the ‘new normal’ but even those are pretty old. It is as if people do not want to predict anything about the future at this point. You are the only one left. Lets hope you are right!

    • Dale, that whole “New Normal” thing always bothered me. There might be some very permanent changes, but the problem at hand has always been a relatively unusual event in US history – not unique, unusual. The last time we went through this sort off things was 80 years ago, so no one is alive that really remembers it.
      To me, the key issue has always been the transformation from one economy to another (which I call Restructuring). That doesn’t mean we’ll be in this downer forever – but that the next upturn won’t be something we can totally anticipate right now.
      Honestly, who thought to buy AOL in 1985 (or whenever it was founded)? Who thought to sell it right at the peak in the late 90s?

  4. glad you found some progress but the big players still control the system for their own benefit – nothing will change until the people rise up and make this a democracy

    • There is a political restructuring going on as well as a cultural one – those are harder to quantify, but they are long overdue. People are returning to cities, living closer together, and lowering expectation. In politics things are moving so damned slowly, but we can see how the old left/right nonsense is collapsing finally – and Ron Paul has a lot more in common with Bernie Sanders. Things are moving – but we have to give it a big shove.

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