Admitting to Economic Crisis

I generally don't like to comment on the current economic situation in our fair country. However, it seems only responsible to point out a couple things to those that reject the idea that we are in a recession or that there is a crisis.

There seems to be some doubt from some people that we (in the USA and every other country) are in a recession and that prices are rising while income is falling. I am really happy for these people, as the current situation has not yet touched them, or they are sufficiently capable of ignoring it. Perhaps they are Senators. The fact of the matter is we are approaching a turning point in the global economy unlike anything in history. Consumers are just beginning to catch wind of this.

A few things that are and will be affecting the all of us:

1. The American dollar has lost 35% of its value since 2002. This means that anything that is imported, now costs 35% more. Look around your house and tell me how many things you see are imported. Now look in your pantry, you'll be surprised how much FOOD is IMPORTED. The upshot is that much of the rest of the world is following us down the tube, keeping the dollar equitable, but portending to bigger problems later.

2. Not only has the price of a barrel of oil (75% of the cost of gasoline) doubled in the last half decade, but the dollar now buys 35% less barrels (see number 1). Compounding that demand for oil in those 5 years has risen 25%. That being the case, it is incredible that we are only paying $3.50 at the pump. I suspect that we are still buying gas that was purchased at cheaper oil prices with more valuable dollars. Once we start buying gas that was created from oil at today's prices with today's dollars, we will rapidly realize gasoline prices 60% more than what they are today. Demand will drop significantly, which could lead to a collapse of the economics of that critical market.

3. How much of our economy rides on the price of oil? How much BIG business? The answer is anything that relies upon cars, trucks, trains, airplanes, and energy for manufacture and distribution. Or anything that relies upon the manufacture of plastics. That encompasses ALL of the Fortune 1000, which directly affects EVERY consumer. That is you.

From these three things, it is evident that much is riding on the price of oil. Unfortunately, no one is willing or capable of taking definitive action on this. Fortunately, this market, like any other, WILL right itself. This does NOT mean that the price of oil will fall. It means that we will simply learn how to do without. This will not be an easy, nor short, transition. It will take decades. But I do think it will happen MUCH faster than most realize. We won't have a choice.

For us in the USA, we have the unfortunate circumstance of a government that is committing TRILLIONS of dollars to propping up the existing oil-based economy, instead of funding the transition of the economy. Hundreds of billions have gone into the war in Iraq, which is now, or has always been, about controlling oil influence in the world's most oil-prolific region. Hundreds of billions have gone into bailing out oil-dependent industries like automobile manufactures and airlines. This last may have been unavoidable to keep jobs in our economy, but it should have come with more oversight over change. The point is, can you imagine where the US economy would have been in 5 years, if those trillions of $$$ would have been invested in cheaper, emerging technologies that will replace global oil dependence over the upcoming years? Talk about a leadership position! We'd be leading the global economy again, instead of dragging it down like an anchor.

Do with this information what you may...

I went to the grocery store last week and bought exactly the same thing on a grocery receipt I had from the same store six months ago. (I found it when cleaning out a drawer.) My bill last week: $93.54. My bill six months ago: $74.93. That is a 24% increase in food prices, that I will not take to the bank.

Pensacola Company Creates Technology That Could Impact Global Energy Supply

PENSACOLA, Fla., August 31, 2007: New technology being developed by a Pensacola company could advance the way oil is moved from the Gulf of Mexico and other ultra-deepwater fields around the world. DeepGulf, Inc. has created innovative technology collectively known as J-Flex – which enables access for the first time beyond the traditional ultra deep offshore frontier of oil and gas pipeline operation.

There are only two options for transporting oil from offshore wells to shore: tankers or pipelines. The floating production and storage facilities associated with shuttle tankers are very costly, with well-known, potentially disastrous environmental impact. Pipelines require much less infrastructure, present far less risk, and have substantially less potential environmental impact. DeepGulf projects do not involve traditional surface “rigs”, and are more than 100 nautical miles offshore, ensuring the safety and beauty of the Gulf Coast’s environmental resources.

Pipelines are thus the preferred solution and are the only means of transportation used from the Gulf of Mexico’s operational deepwater fields to the US mainland, for the time being. Until now, pipelines are limited by the industry’s capability to lay large pipelines in waters deeper than 8,000 feet of water.

DeepGulf’s new J-Flex system means a large number of ultra deep wells are now accessible and no longer remain an untapped energy resource. DeepGulf’s technology makes it economical and safe to develop even the deepest parts of the Gulf of Mexico and around the world.
DeepGulf’s inventors have laid some of the deepest pipelines in the world, designing and building 3 of the 7 existing J-Lay systems in the world. This experience contributed to the development of the J-Flex system. J-Flex capabilities offer critical technical and financial advantages. This will ensure that the Gulf of Mexico’s remains one of the world’s premier oil and gas basins.

“DeepGulf's ability to lay very large pipelines in ultra-deep water will reignite interest in the untapped ultra-deep leased blocks in the deepest part of the Gulf. Not only will the J-Flex system lay much bigger pipe in deeper water than our competitors, it will also lay it faster, completing projects with more economic efficiency. J-Flex innovations will spur many emerging efficiencies in the construction of ultra-deep offshore oil and gas pipelines. Deep Gulf will be at the center of that development", said Chairman Rus Howard, referring to the J-Flex ability to lay a 36" pipe in 12,000 feet of water. “DeepGulf is already fielding inquiries from major oil companies and ultra-deep field contractors in the Gulf of Mexico and other locations around the world. It is clear that ultra-deep is where the action is in offshore construction, and DeepGulf’s J-Flex technology will play an important role in the world’s energy supply”.

For more information about DeepGulf, Inc. please visit http://www.deep-gulf.com/ .